The rate premiums air freight buyers have paid since the escalation of the Middle East conflict in late February are continuing to unwind, with little evidence of a peak season boost for airlines and forwarders to look forward to, as the global air cargo market faces a slower second half of 2026, according to new industry data and analysis from Xeneta.
Data for July 2026 was in line with Xeneta’s earlier market statements. Global air cargo spot rates (valid for up to one month) stood +28% higher year-on-year last month at an average of USD 3.12 per kg, but the pace of growth eased for a second consecutive month. It compared to +38% in June and the +41% peak in May. Spot rates fell -6% month-on-month.
“It’s July, so the market is traditionally softer than June, and, year-on-year, we saw rates coming down as expected. Our more positive outlook for 2026 (compared to our projections in November 2025) in our latest mid-year review is based on the strong growth at the start to the year, but we expect a weaker second half. Very few people are talking about peak season,” said Xeneta’s Chief Airfreight Officer, Niall van de Wouw.
“In all the conversations we’ve had with our shipper community, in only one was there talk of peak season charters. This is another signal of the lower expectation for the coming months,” he added.
Some relief for shippers with lower rates on the way
As the market heads into the August summer vacation period in the Northern Hemisphere, rate declines are set to continue, but the lingering Iran war as well as the recent fluctuations in jet fuel prices mean the way down for rates will be taken in small steps, not the big jumps shippers endured on the way up.
“Airlines will be fighting tooth and nail to avoid reducing rates as quickly as they went up. It’s not in their interests to lower rates quickly, but there is some relief for shippers with the market on a downward trajectory year-on-year.
“Rates are swinging backwards, and we expect that to continue, despite the situation in the Middle East still being unclear,” van de Wouw said.
Early signs new EU e-commerce customs duty is hitting the wider market
The sharpest corridor movements in July were out of Asia into Europe. Spot rates from Northeast Asia to Europe fell -13% month-on-month, with Southeast Asia to Europe down -9%. Most striking was China to Western Europe, where spot rates fell -22% month-on-month to USD 4.15 per kg – a far steeper July decline than the low single-digit falls seen in the same period in the last two years.
The timing is notable, coming so soon after the European Union removed its €150 duty-free threshold for low-value imports on 1 July 2026 and replaced it with a flat €3 duty per item. Market reports already point to freighter capacity being withdrawn from China–Europe e-commerce services.
Middle East premiums unwind slowly
Rates on corridors reshaped by the Middle East conflict remained far above pre-conflict levels.
In the final week of July, spot rates into the Middle East were +84% higher from South Asia and up +47% from Southeast Asia compared with late February, before the escalation of the conflict. Rates from Europe into the region also remained highly elevated, up +62%.
AI-related shipments continue to underpin transpacific growth, with spot rates from Northeast Asia and Southeast Asia to North America both +33% above late-February levels – although this too has eased from the +41% and +42% levels recorded at the end of June. On the transatlantic, summer passenger schedules kept belly capacity plentiful, pushing down Europe to North America spot rates -27% below late-February levels.
Demand growth halves as supply recovers
Global air cargo demand grew +4% year-on-year in July after the +8% year-on-year increase recorded in June.
Capacity supply grew +1% over last year as it continued its recovery from the Middle East disruption. Xeneta’s dynamic load factor measurement of capacity utilisation, based on the volume and weight of cargo flown alongside available capacity, rose two percentage points year-on-year to 61%.
Many market influences still in play
‘There are many factors that can still dictate the market outlook. Is the current Iran War decreasing the speed in which rates decline? How will fuel prices impact rates? To what extent will EU customs duties on lower-priced e-commerce shipments affect volumes into the EU from Asia? Will the EU’s action to fine AliExpress a record €550 million for failing to stop the sale of illegal, unsafe, and counterfeit products lead to a drop in demand for China’s e-commerce?
“The fact we saw rates drop more from China to Europe in June and July versus last year may be another indication of e-commerce legislation already affecting the general freight market.
“The air freight market twists and turns of 2026 may still bring more surprises,” van de Wouw stated.
