Air Freight Rates Stay High Despite Capacity Recovery

Air freight rates are holding firm. Capacity is coming back. Volumes are softening in places. Yet rates stay persistently elevated. That disconnect between supply recovery and price correction is the defining story of mid-2026 air cargo. The market has stabilised at a high floor, anchored by structural forces that are proving far more durable than a simple capacity rebound would normally allow.

The Baltic Air Freight Index eased just 2.1% over the four weeks to 1 June, but remained 32.7% above year-ago levels, rising further to 33.4% year on year in the first week of June. In week 27, covering 29 June to 5 July 2026, average worldwide rates came in at $3.13 per kg, down 1% week on week. Average global spot rates dropped 2% to $3.62 per kg. Asia Pacific spot rates averaged $5.03 per kg, with the Asia Pacific-to-Europe lane at $5.09 per kg and Asia Pacific-to-US at $6.83 per kg, the latter down 3% week on week. Year on year, spot rates globally are still 37% higher. The numbers tell a clear story: the market has not retreated.

Gulf Capacity Gap Keeps Rates Elevated

The US-Israel conflict involving Iran continues to shape the market. Global freighter capacity rose 4% month on month in May and a further 2% in early June, according to Rotate data. Overall, capacity has recovered to 2% above levels recorded in week 7, before the conflict began. But the recovery is uneven. Cathay Cargo stated its global capacity was nearly back to pre-event levels, yet its Dubai and Riyadh services remain suspended. The Middle East and South Asia region is still running a capacity deficit, with up to 70% of Gulf carrier capacity having returned but approximately 30% still absent from the market.

Morrison Express CEO Asok Kumar estimated that about 30% of Gulf carriers’ capacity had not yet returned to the market, noting that Qatar, Emirates, and Etihad are major cargo carriers and their continued absence has a meaningful impact on capacity. That 30% absence matters. Qatar, Emirates, and Etihad are not peripheral players. They anchor large volumes on key lanes between Asia, Europe, and the Americas. Until that capacity fully returns, the market cannot rebalance. Kumar also flagged the cost uncertainty this creates: customers cannot properly forecast shipping costs, which adds pressure across supply chains.

Fuel Costs and AI Demand Drive the Rate Floor

Jet fuel prices fell nearly 25% between April and May. That sounds significant. It is not enough. Fuel costs remain more than 57% above last year’s average. Cathay Cargo reduced its long-haul fuel surcharge by around 14% for the second half of June, from HK$11.8 to HK$10.1 per kg. That surcharge is now almost 46% below its April peak but still more than three times higher than pre-conflict levels. Fuel remains the primary structural cost holding rates up.

AI infrastructure demand is the second major driver. Asia Pacific chargeable weight was up 8% year to date. Rates from Asia Pacific to Europe held 39% above year-ago levels; to the US, 36% higher. Taiwan to Europe shipments surged approximately 20% over three weeks, driven by demand for AI-related computer equipment. According to Morrison Express CEO Asok Kumar, some semiconductor manufacturers are booked out until end of 2028, with many indicating demand will continue until 2030. One vertical carrying the market when others soften is unusual. AI is doing exactly that.

Volume Shifts and the EU De Minimis Rule Change

Global cargo volumes declined for a second consecutive week in week 27, with chargeable weight falling 2% week on week. North America volumes dropped 10%, driven by the US Independence Day holiday. That is seasonal. More structurally significant is what happened on the Hong Kong to Europe corridor. Tonnage fell 12% week on week following the EU’s removal of the de minimis import duty exemption for goods valued below €150, effective 1 July 2026. That single regulatory change particularly affects low-value e-commerce flows from Asia to Europe.

The contrast with Taiwan is sharp. While Hong Kong to Europe fell sharply, Taiwan to Europe surged on AI equipment flows. Cathay Cargo’s Dubai and Riyadh services remain suspended, though overall Gulf carrier capacity has partially recovered, with up to 70% returning to the market. The market is fragmenting by lane and commodity. Blanket rate forecasts are less useful than corridor-level analysis right now.

CSN Perspective

For freight forwarders quoting air cargo today, rate stability at elevated levels creates a specific problem. Clients expect prices to fall as capacity returns. They are not falling fast enough. The structural factors – Gulf carrier absences, fuel costs, AI demand – are not short-term. Forwarders need access to live, comparable rates across carriers and lanes to quote accurately and win cargo. Guessing or working from last week’s rates costs margin. CSN’s quoting portal gives you current, multi-carrier rate comparisons across airport-to-airport and door-to-door options to help you stay ahead of rate movements.

Global tonnage growth slowed to just 3% year on year in May, yet rates held 36% above the prior year. That gap between volume growth and rate levels is not closing quickly. Forwarders who can move fast on quotes, lock rates, and book direct will capture cargo that slower competitors lose. Speed and accuracy on quoting is the competitive edge right now.

Frequently Asked Questions

Why are air freight rates still high if capacity is recovering?

Capacity has recovered globally, but around 30% of Gulf carrier capacity remains absent from the market. Gulf carriers including Qatar, Emirates, and Etihad are major players. Their continued absence keeps effective supply tight, supporting elevated rates even as overall freighter numbers rise.

How much have air freight rates fallen from their peak?

Average worldwide rates came in at $3.13 per kg in week 27, down 1% week on week. Spot rates averaged $3.62 per kg globally, down 2% week on week. Year on year, spot rates remain 37% above prior-year levels. Rates have eased from peaks but remain significantly elevated.

What impact did the EU de minimis rule change have on air cargo?

The EU ended its import duty exemption for goods valued below €150 on 1 July 2026. Hong Kong to Europe tonnage fell 12% week on week immediately after. The change particularly affects low-value e-commerce flows from Asia to Europe.

Which lanes are seeing growth despite the broader slowdown?

Taiwan to Europe shipments surged approximately 20% over three weeks, driven by AI-related computer equipment demand. Asia Pacific chargeable weight was up 8% year to date. Gulf carrier capacity has partially recovered, with up to 70% returning, though some key services including Cathay’s Dubai and Riyadh routes remain suspended.

When will air freight rates return to pre-conflict levels?

There is no firm timeline. Morrison Express CEO Asok Kumar has noted that if conditions revert to pre-conflict norms, market dynamics would be expected to correct themselves and rates could not remain at elevated levels indefinitely. But with fuel costs still more than 57% above last year and Gulf carrier capacity still partially absent, the structural pressures remain in place through mid-2026.

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