The unexpected drop in ecommerce traffic has exposed the airfreight market’s dependency on this single vertical. Forwarders reported that since the pandemic, the sector had been significantly reliant on ecommerce, while other shippers’ volumes had been considerably lower. One forwarder noted, “Ecommerce volumes had fallen off a cliff since the start of the year, after previously supporting rates out of China.” They added that this has led to rates plummeting by about 40% since last month, with current quotes averaging $2.50 per kg, compared to $5 in December.
They further explained that there had been a massive reduction in activity, and it’s nowhere near as busy as expected. Another forwarder suggested that retailers now have largely full inventories, while front-loading into the U.S. ahead of new tariffs has been observed. “Rates to the U.S. are strong and holding firm,” the forwarder said, adding that space was extremely tight in the last quarter, and this trend is continuing.
They warned that, with or without new tariffs, there might be a potential flatlining in the second quarter.
Ecommerce impacts on airfreight market
Looking at China-Europe routes, another forwarder mentioned that European carriers face pressure from new Chinese entrants cutting Far East rates to capture volumes.
This scenario, they noted, was similar to last year, with airlines flying full on routes into Europe but suffering from a shortfall on the reverse leg. They expected this to result in rates holding for the summer months. A UK-based operator highlighted that the currency exchange rate in the UK is increasing airfreight rates – not favoring the exporters much.
They added that, despite UK export rates being stable, the weaker traffic to China may help prices hold. On the import side, the scenario remains uncertain with a lot depending on consumer and business confidence, which currently appears fragile. In summary, the airfreight sector is facing significant challenges due to plummeting ecommerce traffic, with varied impacts across different routes and regions.
The future remains uncertain with potential flatlining and fluctuating confidence levels affecting the market.
