Air cargo shippers drop long-term contracts as short deals surge

Check your shipping invoices this week. Air cargo shippers are completely abandoning the traditional 1-year fixed contract, opting instead for quick 3-month agreements to survive a volatile market. Xeneta, a major ocean and Air freight benchmarking platform, reports that short 3-month deals now represent 60% of new shipper contracts starting in the third quarter, a massive jump from 47% just months earlier. Meanwhile, the share of standard 12-month contracts plunged year over year from 40% to 25%. Niall van de Wouw, chief Air freight expert at Xeneta, looked at the data and stated plainly, "A one-year fixed rate deal doesn’t fit the current conditions." Global Air cargo spot rates valid for up to 1 month averaged $3.10 per kilogram in September, up 27% compared to the previous year. High jet fuel prices, pushed up by conflict in the Middle East with Brent crude rising above $100 in early September, continue to squeeze operating costs. Trade routes are shifting fast, too. E-commerce exports from China to the U.S. jumped 17% in August, while low-value e-commerce goods from China to Europe crashed 40% after the European Union implemented a strict new customs duty in July. For your business, locking yourself into rigid, long-term carrier deals right now could leave you paying well above market rates if conditions shift. Flexibility is the only insurance policy left standing on the tarmac.