Fuel costs outpace air cargo yields as freighter margins split

By Amara Osei

Fuel prices rose 111% year on year in the final week of September, outpacing a 26% increase in global air cargo yields and squeezing freighter economics. The mismatch matters most to airlines operating dedicated freighters.

Rotate CEO Ryan Keyrouse presented the figures at TIACA’s Air Cargo Forum in Miami, warning that a strong global market concealed sharply different results by trade lane and flight direction. The yield comparison uses Xeneta data.

Fuel prices fell during the Middle East ceasefire before rising again, while yields broadly stabilised. “Airlines are feeling quite a bit of pressure when it comes to fuel prices, right now,” Keyrouse said.

The squeeze was most acute for freighters. Rotate’s model of Boeing 777 freighter economics showed the gap between revenue and costs narrowing as fuel became more expensive, with some trade lanes producing negative contributions.

Which direction can carry the freight?

Rotate’s September estimates showed a stark split in modelled Boeing 777 freighter flight contributions:

• Asia to North America: positive $2.55 per kg.
• North America to Asia: negative $2.12 per kg.

These figures represent modelled flight contributions, not reported airline profits. Still, they show why a network can be busy and profitable in one direction while losing money in reverse.

Keyrouse described the pattern as making money one way and losing money the other, with margins tightening and network planning becoming harder. Weak return flows leave airlines carrying the cost of an imbalanced network rather than a shortage of freight.

Why yields differ so sharply

Late-September year-on-year yield changes varied considerably across major air cargo lanes:

• Europe-Middle East: +56%.
• Asia-North America: +30%.
• Asia-Middle East: +24%.
• Europe-North America: +19%.
• Asia-Europe: +17%.

That range matters more than the global average for airlines allocating aircraft and shippers buying capacity. It also illustrates why “air cargo growth” can conceal very different commercial realities.

Keyrouse called the current period historically healthy for air cargo supply and demand. Demand growth averaged approximately 9% over the past 36 months, compared with capacity growth of about 5%, reversing the pre-2020 pattern in which capacity expansion outpaced demand.

Growth has also become concentrated by geography and commodity. China’s share of global air cargo exports rose from 27% to 34%, while ecommerce and AI-related cargo generated roughly two-thirds of demand growth over the past couple of years.

Keyrouse said AI could contribute more as machinery and power-generation equipment moved with technology supply chains. This concentration has deepened the imbalance between Asian exports and return flows, forcing airlines to manage weaker backhauls alongside higher fuel bills.

What growth is ahead?

Rotate expects global demand to keep expanding:

• Fourth quarter 2026: average year-on-year demand growth of 3.1%.
• First half 2027: average year-on-year demand growth of 5.1%.

The company identified Chinese ecommerce exports to the US, AI-related technology exports from Taiwan and South-east Asia to the US, and rising intra-Asia trade as key drivers.

Industry sentiment also remained positive. Seventy percent of respondents in Rotate’s sentiment index expected this year’s peak season to be at least as good as 2025’s.

Over the next 12 months, Rotate expects demand growth of around 3.3%, roughly matching capacity expansion of about 3%. Freighter deliveries and conversions will drive much of the additional supply, with aircraft retirements also included in the estimate.

What does this change for shippers?

For shippers, the practical change is that a global capacity headline says little about the lane they need. Direction, yield and backhaul strength now carry more weight, particularly where a modelled return flight loses $2.12 per kg.

For carriers, network planning gets harder when one direction earns $2.55 per kg and the reverse loses $2.12 per kg. For forwarders, the reward lies in helping shippers through disruption: customers are said to promise more freight to providers that deliver when it matters.

That is not balance; that is a routing problem. Air cargo can grow, fuel can accelerate and capacity can expand without every airline or trade lane earning a sensible return.

“Yes, next year there will be a global balance between supply and demand, but that is not at a tradelane level,” Keyrouse said. “You will see airlines and companies really fighting it out to find opportunities on those different tradelanes.”

With demand and capacity both tracking close to 3% over the next 12 months, rates should remain a lane-by-lane contest rather than settle into one global cycle.