Market update

Freight Market Update: July 9, 2025

Shared by Elizabeth • July 09, 2025

AIR FREIGHT

General Air Cargo In Decline As China-us E-commerce Boom Slows

Airlines prioritized surging e-commerce shipments on trans-Pacific and Asia-Europe routes over the past few years at the expense of general air freight. But as US tariffs curb low-value imports from China, carriers are finding traditional markets have also declined.

In 2024, air cargo experienced a record 12% growth in global volume, primarily driven by e-commerce demand. However, the elimination of the U.S. duty-free exemption on May 2nd has resulted in decreased air cargo demand on the trans-Pacific route. As a result, airlines that heavily focused on e-commerce are now seeking opportunities in traditional forwarder-driven markets, which have weakened due to various economic and geopolitical factors.

Since May 2nd, there has been a drop in air cargo demand on the trans-Pacific. The data shows freighter capacity deployed on the eastbound trans-Pacific from May 12–18 fell 8% yoy to 82,000 tons while increasing 19% yoy to 74,000 tons on Asia-Europe.

The air cargo rates from Hong Kong to the US surged 50% ahead of the May 2nd deadline, according to Xeneta. Since then, rates have declined.

Asia Pacific to North America air freight capacity with weekly percentage change

Image source: spglobal

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

June Expected To Be Peak For Niche Carriers In The Trans-pacific: Analyst

Niche carriers, smaller operators with limited deep-sea capabilities, represented 7%-10% of the total weekly capacity on the Asia-North America West Coast (NAWC) in 2019. During the pandemic, new entrants capitalized on high freight rates and strong consumer demand, increasing niche carriers' share to 10%-15% by mid-2021. However, as market conditions stabilized, these new entrants phased out their services by June 2023. By January 2024, niche carriers increased their capacity share to 13%, indicating a return of opportunistic carriers to the market due to favorable conditions.

According to Sea-Intelligence, recent months have seen niche ocean carriers deploying 4.6% of the weekly capacity in trans-Pacific by the end of June in which the capacity “is back at the level” seen during the height of the pandemic. The draw for the niche carriers is the strength in spot freight rates, Sea-Intelligence said, although those rates have already started to soften amid the broader injection of fresh capacity.

Sea-Intelligence believe current conditions mirror those of the pandemic. If history repeats, they may quickly withdraw capacity once the market normalizes. The data sees the current surge in niche carrier capacity is ending fast, the weekly niche carriers will account for 3.8% of capacity by the end of July, with that amount dropping to 2.6% by mid-August

Niche Carrier Cap Share of Weekly Asia-NAWC Cap (3wk avg.)

Source: JOC, SeaIntelligence718

Vessels Now Keeping to Omani Waters in Strait of Hormuz Traffic Scheme

Shipping traffic through the Strait of Hormuz is currently adhering more strictly to established sea lanes within Omani waters, avoiding Iranian territorial waters in response to heightened regional tensions and recent U.S. military actions against Iran. Vessels entering and leaving the Arabian Gulf are navigating closer to the Omani coast in the Gulf of Oman approaches and maintaining routes wholly within Omani waters at the strait’s narrowest point, a shift from previous patterns that often included Iranian waters. This adjustment aims to reduce risk amid concerns over potential conflict escalation, while the strait remains open and commercially active with routine traffic levels. However, concentrating ships into narrower lanes near Oman and the Emirati coast increases collision risks. Maritime authorities continue to advise caution, especially given Iran’s military reach and ongoing geopolitical instability in the region

Concurrently, the escalating Israel-Iran conflict has triggered a sharp rise in shipping insurance costs in the Middle East. Insurance premiums for vessels transiting the Persian Gulf have increased from 0.125% to 0.2% of a ship’s value, with war risk rates also climbing for the Red Sea and Israeli ports seeing a more than threefold surge. The validity period for insurance quotes has been shortened due to market volatility, and some shipowners are rerouting to avoid the Strait of Hormuz, causing a modest decline in voyages through the region.

Ships in the Straits of Hormuz identified by vesselfinder.com

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

Source: Xeneta