Freight Market Update: June 9, 2025

AIR FREIGHT

Tariffs Continue to Disrupt Freight Flows and Shift Modal Growth and Strategy

• In April, heightened trade tensions, intermodal volume declines, and a sharp contraction in ocean and air freight demand shaped the overall landscape. Meanwhile, warehousing demand is rebounding as firms adapt their supply assurance strategies in response to global uncertainties and potential cost increases.

• Airfreight industry revenue is forecasted to contract by $22B over three years, as e-commerce shipments account for 50-60% of China-US shipments. As China-to-US container bookings drop and e-commerce air shipments take a hit, it seems that the industry is shifting from speed-focused models to ones centered on cost efficiency and resilience. Warehousing demand appears to have some early-stage indications of rebounding, driven primarily by stockpiling strategies and realignment of supply chains.

• Urban Outfitters, a lifestyle apparel retailer, is taking on tariffs by shifting its primary mode of cargo transportation from air freight to ocean freight, cutting a major cost in its inbound logistics network. The air-to-sea conversion would protect margins but add about 30 days to delivery times. To account for the 30 extra days at sea, the lifestyle apparel retailer is planning to bring in fall product earlier in the second quarter.

Source: MSN, Comments from PWC Principal Partner

Image source: Maritime Gateway

Airfreight Rates – Baltic Exchange Airfreight Index

Source: Air Cargo News

Baltic Exchange Airfreight Index (BAI) powered by TAC Data

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

OCEAN FREIGHT​

How high will ocean freight rates go after US and China lower tariffs for 90 days? Shippers don’t need to sacrifice financial efficiency for supply chain resilience

• Shippers are clearly ready to pay higher prices to ensure their goods arrive in the US within the 90-day window. After the ‘Liberation Day’ announcement, many opted for air freight to avoid tariffs, finding the higher cost acceptable compared to delays.

• On the China to US West Coast route, rates rose 8% since May 14, from USD 2,600 to USD 2,805 per FEU. Rates are expected to climb higher due to urgency from the US-China tariff announcement, as shippers prioritize moving cargo and renegotiate with carriers.

• Once shippers have built up inventories, they will not continue to frontload imports. Demand will therefore ease, and carriers will once again be struggling to fill their ships.

• This means the traditional Q3 peak season will arrive earlier in 2025, but it should not take too long for spot rates to soften and continue the downward trend seen during Q1. Carriers may start removing capacity in response – just as they did while the 145% tariffs were in place – but it will probably not be enough to stop rates falling to levels not seen since Q4 2023.

Far East to US West Coast market average and mid-high spot rates

Source: Xeneta

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

Source: Xeneta