Market update

Freight Market Update: May 9, 2025

Shared by Elizabeth • May 09, 2025

AIR FREIGHT

Air cargo shippers opt for short-term contracts as tariffs escalate

Shippers and freight forwarders are hesitant to make long-term commitments on air cargo capacity as international trade tensions rise, according to an April 3 report from Xeneta. In Q1, 79% of shipper contracts were short-term agreements of three months or less, a nearly 20 percentage point increase year-over-year. Niall van de Wouw, Xeneta’s chief airfreight officer, noted that slowing rate growth typically encourages longer commitments, but the current climate has led to uncertainty.

The U.S. is set to eliminate tariff-free access for low-value shipments from China and Hong Kong, potentially costing the air cargo sector over $22 billion in revenue over three years. Derek Lossing of Cirrus Global Advisors warns that these tariff increases could severely impact demand on e-commerce platforms like Temu and Shein. E-commerce shipments account for about 50-60% of air volumes between China and the U.S. Lossing predicts that total air cargo revenue on this trade lane could drop by over 30% due to the new trade policies.

Cathay Pacific Airways anticipates a reduction in air cargo demand between mainland China and the U.S. due to new tariff regulations. The airline plans to shift freighters to alternative routes to adapt to this changing landscape.

Airfreight Rates – Baltic Exchange Airfreight Index

Baltic Exchange Airfreight Index (BAI) powered by TAC Data

Rates are based on spot and contract prices provided by freight forwarders

Chinese freight ship traffic to busiest U.S. ports, Los Angeles, Long Beach, sees steep drop

There is a significant decline in Chinese freight vessel traffic to the U.S. ports of Los Angeles and Long Beach, the busiest for Asian freight, due to President Trump's tariffs and recession fears.

According to Port Optimizer - a tracking system for ships, vessel arrivals for the week ending May 3 dropped 29% week-over-week and 44% year-over-year, with only 12 vessels scheduled in this week compared to 22 the week of April 20. A total of 62,568 TEUs are expected to arrive the week of May 4 to May 10, down from 120,608 TEUs the week of April 20 to April 26.

CNBC recently reported a total of 80 blank, or canceled, sailings out of China driven by reduced demand, trade war tensions and adjustments in transpacific routes. The FreightWaves also highlights the severe impact on Los Angeles truckload volumes, with a 31% drop in accepted tenders year-over-year and a projected decline to just 45,000 weekly import containers by mid-May, the lowest since early 2020. This has caused a ripple effect, with over 700,000 trucking loads vanishing nationwide, signaling broader supply chain challenges.

Treasury Secretary Scott Bessent suggested a possible de-escalation of the trade war, but the situation remains critical for West Coast logistics

Import and export volumes processed at U.S. ports

Total monthly TEUs (Jan. 2022–March 2025)

Ocean Freight Rate Movement (Market Average) in the Past 3 Months

Source: Xeneta