Buyers Pull Back From Long-Term Air Cargo Deals as Capacity Returns

A growing share of air freight shippers are walking away from multi-year fixed-rate agreements, favoring short-term bookings and spot exposure as transpacific and Asia-Europe capacity rebounds and rate volatility clouds the outlook for the next peak season.

The shift reverses the 2021-2022 pattern, when carriers locked in block-space agreements at premium tariffs and shippers absorbed fixed rates to secure capacity. The balance of power is tilting back toward shippers, and procurement teams are rewriting term sheets.

"Air freight shippers weary of long-term fixed contracts" — that headline framing from Yahoo Finance captures the moment, as shippers tell forwarders and GSSAs they will convert only what they need and prefer month-to-month pricing over annual commitments.

What's driving the shift?

Three conditions have converged. Belly capacity on long-haul passenger services has rebuilt faster than expected, removing the scarcity premium that underwrote long-dated deals at the height of the supply shock.

Transpacific and Asia-Europe spot benchmarks remain volatile enough that shippers question the value of fixed commitment.

Demand visibility into the second half of the year has not solidified, leaving freight forwarders and direct shippers reluctant to underwrite volume risk.

Which operators are exposed?

The implications split across the operator base. Integrated express carriers such as FedEx and UPS, with heavier direct-sales contract books, retain structural advantage but face price resets at renewal.

Network carriers including Cathay Cargo, IAG Cargo, Lufthansa Cargo and Air France-KLM Cargo are seeing tender responses slip as customers parcel out volumes.

Charter and ACMI providers face the stiffest pushback, because block-space equivalents do not fit easily into a short-term spot strategy.

Forwarders sit between buyer and carrier. Account managers at Kuehne+Nagel, DSV, DHL Global Forwarding and DB Schenker report shippers want shoulder-period flexibility to bump or reduce tonnage based on inventory cycles — a position that forces middlemen to negotiate softer minimum-commitment clauses or risk defection.

Why now?

The contract calendar explains timing. Annual air freight deals typically renew in the April-June window, overlapping with IATA peak-season forecasts and the conclusion of Q1 capacity ramps.

With demand normalizing from the supply-shock years, shippers argue the scarcity narrative no longer holds and the pricing premium embedded in 2022 contracts no longer fits.

What to watch next?

Carriers will likely respond with tiered products: hybrid fixed-plus-flex blocks, capped spot indexation and shorter three-to-six-month contract durations to retain volume share without surrendering rate. Suppliers that hold firm on minimum tonnage risk losing volume to those willing to unbundle.

Outlook

For the remainder of the year, contract activity will remain a story of erosion rather than expansion, with capacity returning faster than demand and shippers holding leverage. Expect peak-season surcharges to draw test cases as carriers attempt to monetize congestion, but the long-term fixed-rate model is unlikely to regain the grip it held during the supply-shock years.