Air cargo spot rates experienced their first decline in over a year, dropping 4% year-over-year to $2.44 per kilogram in April 2025, according to Xeneta's latest market analysis. This downward trend reflects growing concerns about international trade uncertainty and shifting tariff regulations that continue to reshape global supply chain strategies. For transportation spend managers, these rate fluctuations signal the need for enhanced visibility and agile decision-making capabilities.
Key Takeaways:
- Global air cargo spot rates fell 4% year-over-year to $2.44 per kilogram in April 2025
- Tariff uncertainty drives modal shift decisions between air freight and ocean shipping
- Regional rate variations create complex planning challenges for global transportation networks
- Market volatility increases importance of real-time freight audit and cost tracking capabilities
- Carriers may accelerate rate negotiations as capacity utilization decreases
Global Air Freight Market Shows First Decline in a Year
The recent decline in global air cargo spot rates represents a significant shift in market dynamics after sustained growth throughout 2024. Xeneta Chief Airfreight Officer Niall van de Wouw attributes this trend to "declining sentiment and concerns, particularly among airlines, over what will happen once more stability returns to international trade."
Despite the overall downward pressure, global air cargo volumes increased 6% year-over-year, indicating that demand remains strong while pricing faces competitive pressure. The global dynamic load factor reached 57%, measuring both volume and weight of cargo flown relative to available capacity.
Market analysts suggest that carriers may accelerate rate negotiations to secure volumes as flights become less full. This creates opportunities for shippers to negotiate more favorable terms, but requires comprehensive freight audit capabilities to track and validate these changing rate structures across multiple carriers and routes.
The timing of rate declines coincided with the Trump administration's announcement of a 90-day tariff reprieve in May, though this policy change came too late to reverse the softening trend that had already begun affecting freight markets globally.
Tariff Policies Drive Modal Shift Decisions
Trade policy uncertainty continues to influence transportation mode selection decisions across global supply chains. The end of the de minimis exemption on May 2 contributed significantly to market disruption, prompting volume drops and creating excess air freight capacity that forced some carriers to redeploy assets to more profitable routes.
Van de Wouw explains that "tariffs are of a different overall magnitude in terms of financial impact compared to the cost of using airfreight instead of ocean." This cost differential creates compelling business cases for air freight when companies can avoid tariffs through faster transportation modes, despite higher per-unit shipping costs.
Production shifts away from China toward countries with lower U.S. tariffs are changing traditional shipping patterns. While routes themselves may not change completely, the countries of origin for flights are shifting to accommodate these supply chain adjustments.
Some market stability returned when the U.S. lowered tariffs on low-value e-commerce shipments from China and Hong Kong to 54%, or implemented a $100 flat fee for parcel shipments. However, these policy changes create ongoing complexity for transportation planners who must continuously evaluate mode selection based on evolving regulatory frameworks.
Regional Rate Variations Create Planning Challenges
Regional rate performance shows significant variation that complicates transportation planning across global networks. Air cargo spot rates from Northeast Asia to North America increased 7% year-over-year to $4.53 per kilogram, contrasting sharply with the global decline trend.
The China to U.S. trade lane demonstrates particularly volatile behavior. While seasonal rates initially trended downward, spot prices bounced back to $4.31 per kilogram by June 1, representing a 14% increase from the low point during the week ending May 11.
These rapid fluctuations make contingency planning extremely challenging, as strategies can quickly become obsolete in a rapidly changing trade environment. Supply chain leaders require real-time rate monitoring and transportation spend management capabilities to adapt quickly to changing market conditions.
Van de Wouw notes that uncertainty has made supply chains "a mess," prompting modal shifts for goods that wouldn't ordinarily move by air freight. This disruption creates both opportunities and risks for companies with flexible transportation strategies and comprehensive cost tracking capabilities.
Managing Transportation Costs During Market Volatility
Effective cost management during volatile rate periods requires sophisticated tracking and analysis capabilities that go beyond traditional procurement approaches. Rapid rate changes make manual monitoring insufficient for maintaining budget control and identifying optimization opportunities.
Freight audit systems become critical during periods of rate volatility, ensuring that companies pay correct charges while capturing data needed for strategic decision-making. When rates change frequently, the risk of billing errors increases significantly, making automated audit capabilities essential for cost control.
Contract negotiation strategies must account for market uncertainty while providing flexibility to adapt to changing conditions. Companies should evaluate rate structures that include provisions for market adjustments while maintaining predictable cost frameworks for budget planning purposes.
The relationship between air freight and ocean shipping markets provides additional complexity, as longer lead times in ocean transport can influence air freight demand patterns. Understanding these interconnections helps transportation managers anticipate rate trends and adjust strategies proactively rather than reactively.
Strategic Planning for Continued Rate Pressure
Market analysts expect continued downward pressure on air freight rates as trade policies stabilize and carriers adjust capacity to match demand patterns. Van de Wouw anticipates that "there will be a time when there's an agreement on tariffs – and I don't expect the end result to promote trade and will, therefore, hamper airfreight."
Carriers may accelerate efforts to secure volume commitments as market conditions become more competitive. This creates opportunities for shippers to negotiate improved terms, but requires sophisticated analysis capabilities to evaluate offers and optimize transportation networks effectively.
A short-term surge in cargo is anticipated as the 90-day tariff truce ends July 9 for most countries and August 13 for China. Frontloading strategies continue as mitigation approaches for shippers concerned about ongoing trade negotiations and potential tariff changes.
Navigate Air Freight Rate Volatility with Data-Driven Strategies
Declining air cargo spot rates present both opportunities and challenges for supply chain leaders managing global transportation networks. Success requires sophisticated tracking capabilities, flexible procurement strategies, and comprehensive understanding of the interconnections between trade policy, rate trends, and operational performance.
The current market environment rewards companies with advanced freight audit capabilities and real-time cost visibility across multiple transportation modes and regions. Organizations that can quickly adapt to changing rate structures while maintaining cost control will gain competitive advantages during this period of market adjustment.
Ready to optimize your air freight spending during volatile market conditions? Contact Trax today to learn how our comprehensive freight audit and transportation spend management solutions provide the visibility and control needed to navigate changing rate environments effectively.