Freighter capacity splits air cargo winners as rates climb 26%

By Tom Whitfield

The Baltic Air Freight Index averaged 2,651.25 in October, up 8.2% on September and 25.9% year on year — and the gap between air cargo operators with freighters and those without is now deciding who captures that pricing power.

IAG Cargo, which gave up its freighter operations more than a decade ago, posted a 13.9% drop in third-quarter traffic, measured in cargo tonne km, to 1,101m CTK. Revenue per CTK rose 20.7%, which more than compensated: cargo revenue crept up 3.9% to €294m ($328m). For the first nine months, cargo revenue fell 5.3% to €864m, traffic dropped 12.8% and yield rose 8.7%.

The group blamed the Middle East disruption and the cancellation of third-party long-haul freighter capacity, which hit volumes particularly from Asia Pacific. Higher yields across India and Asia-Pacific, plus resilient demand for premium and specialist products, softened the blow. Notably, IAG Cargo did not issue its own results release, and the parent's report neither identified the cancelled freighter services nor quantified replacement capacity from its new joint business with Qatar Airways Cargo and MASkargo.

What does owning aircraft do for earnings?

DHL's numbers answer that directly. DHL Global Forwarding moved 497,000 tonnes of airfreight in Q3, up 12% — 53,000 tonnes — year on year, with growth strongest on Asia-origin tradelanes. Its Express division went further. Temporary constraints in the international airfreight market generated extra demand that DHL served through its own global network, adding roughly €100m to quarterly earnings. Express operating profit jumped 50% to €1.04bn.

Emirates SkyCargo tells a similar story from the Gulf. It carried about 1.2m tonnes in the six months to September, down 1%, yet cargo revenue rose 52%. Emirates credited regional conflict for shrinking available airfreight capacity and said shipping disruption pushed customers toward air. Over the period it added five new 777 freighters and deployed its first passenger-to-freighter conversion, expanding its freighter network and frequencies.

Is this a peak season or not?

The rate data looks peak-like. Xeneta reported global demand up 6% year on year in October against flat capacity, with its dynamic load factor — covering both weight and volume — rising two percentage points to 63%. Hong Kong–Europe October average rates rose 11.1% from September on the Baltic indices, while Shanghai–North America's BAI82 climbed 7.1%.

TAC's numbers show Hong Kong spot rates to the US east coast climbing from HK$51.84 per kg on 30 September to HK$63.02 on 30 October. Rates to Europe rose from HK$35.42 to HK$40.84. Xeneta's own dataset put October's global average spot rate at $3.11 per kg, up 4% month on month and 29% year on year, with Europe–North America recording the biggest monthly gain among its 10 corridors, up 10% to $2.31 per kg as airlines switched to winter schedules.

But Niall van de Wouw, Xeneta's chief airfreight officer, sees no late surge coming. "The market is continuing its steady pace of growth, as we've been reporting since March. It's strong, but it's not a 'peak' season, and time is quickly running out for volumes to shift higher," he said. Few signs exist of a sudden jump in capacity pressure or charter prices that would signal accelerating demand.

One caveat on margins: IATA figures cited by TAC show jet fuel prices 112.8% higher year on year on 30 October. Higher freight rates don't flow straight to airline profits, even where semiconductor and AI-related equipment demand is strong.

Where is capacity actually going?

The picture varies by corridor. Cargo Facts Consulting reported a 5.2% month-on-month recovery in Asia–Europe freighter capacity in September after three straight monthly declines, while Asia–North America grew 2.3%, its third successive rise. In October, though, Xeneta recorded another decline in direct Asia–Europe freighter capacity, on top of losses on routings via the Middle East.

The transpacific has diverged. Asia Pacific–North America chargeable weight ran about 15% higher year on year last month, with freighter capacity growing on a similar trajectory. CH Robinson's November update warned that airlines could redirect freighters toward stronger transpacific demand — oversized AI-infrastructure shipments depend on freighters — reducing choices elsewhere, though capacity remained available on most major Asia–Europe services, where the seasonal peak developed more slowly than expected.

A Japan–Europe joint venture returns

Lufthansa Cargo and ANA announced plans to explore reviving their Japan–Europe cargo joint venture, expanded to include Swiss WorldCargo and Nippon Cargo Airlines. The original venture ran from 2014 until September 2023, when it was suspended amid restructuring at ANA Holdings' cargo business. A new memorandum of understanding lets the four carriers assess cooperation on routing and capacity, combining their European and Japanese networks including NCA's dedicated freighter fleet. No launch date or flight commitments were announced. "We are pleased to renew our dialogue and broaden our cargo joint-venture to include Swiss WorldCargo and Nippon Cargo Airlines," said Kenichi Wakiya, ANA's EVP for cargo marketing and services and CEO of ANA Cargo.

Looking ahead, Xeneta expects rates to decline overall in 2027, with some Asia–Europe cargo switching back to ocean once shipping schedule reliability recovers sustainably, most likely from the second quarter. "In the past couple of years, it has not been the level of demand that caused the uptick in rates, it has been the availability of capacity. If the Middle East situation recovers, there will be a rebalancing of demand and supply, and rates will then become lower," said van de Wouw. Meanwhile, uncertainty keeps complicating longer deals: forwarders can offer 12-month contracts, he noted, "but, given the market conditions, they would have to bake-in so much uncertainty the price becomes uncompetitive."