Air freight markets are showing signs of greater stability following the recent US-Iran peace agreement and the restoration of much of the disrupted Middle East network.
However, while the crisis phase has eased, the market has settled into a new reality characterised by elevated rates, constrained capacity and strong demand from technology sectors.
Capacity is gradually returning, but not quickly enough to restore equilibrium. As a result, rates remain significantly higher than a year ago and supply chains continue to face a more expensive operating environment.
Recovery is underway, but the market remains tight
The reopening of airspace and the restoration of services through the Gulf have brought welcome relief. Major carriers have rebuilt much of their network and flight frequencies across the UAE and Qatar have increased steadily.
Yet the impact of the disruption has not fully disappeared. A large proportion of Asia-Europe traffic previously relied on Middle East hubs, and the loss of capacity earlier in the crisis created a structural imbalance that continues to affect the market.
Global freighter capacity has improved and some transpacific routes are approaching pre-disruption levels. However, capacity growth continues to lag demand growth. Over the past two years, cargo volumes have expanded by around 10%, while capacity has increased by only about 6%, leaving the market vulnerable to even modest disruptions.
Longer routings, restricted airspace and operational inefficiencies mean that available aircraft do not always translate into usable cargo capacity. This continues to underpin rates across key trade lanes.
Rates remain well above last year
Despite the return of additional capacity, pricing has proved remarkably resilient.
Global air freight rates have eased only marginally in recent weeks and remain more than 30% above last year's levels. Asia-Europe rates reached their highest point of the year during May before softening slightly, but remain around 50% higher than a year ago.
Volumes have grown by only low single digits, demonstrating that the current market is being driven more by restricted capacity than by explosive demand.
Weekly fluctuations continue, but the underlying balance between supply and demand remains tight enough to prevent any meaningful correction.
Technology and e-commerce continue to drive demand
Demand remains healthy rather than exceptional.
Growth is being supported by semiconductor production, AI infrastructure investment and high-value electronics shipments. Asia-Pacific volumes have increased by high single digits this year, while the flow of e-commerce cargo has also shifted as changing US regulations redirect some volumes towards European markets.
Forwarders report that demand broadly reflects global economic growth rather than a dramatic surge. However, with little spare capacity available, even moderate volume increases are sufficient to sustain elevated rates.
The summer contract season and continued integration activity among major logistics providers are also expected to support volumes during the second half of the year.
Fuel volatility remains a key variable
The easing of tensions in the Gulf has helped energy markets stabilise and jet fuel prices have fallen by around a quarter from recent peaks.
Fuel surcharges have responded with low double-digit percentage reductions, offering some relief to shippers. However, jet fuel prices remain more than 50% higher than last year's average and continue to represent a significant component of total transport costs.
While the US-Iran agreement reduces the risk of further disruption, energy markets remain sensitive and pricing mechanisms often lag underlying fuel movements, making budgeting difficult.
A firmer market, but a more predictable one
The air freight market has moved away from crisis conditions, but it has not returned to pre-disruption norms.
Capacity is recovering unevenly. Demand from technology and high-value sectors remains strong. Fuel costs continue to influence pricing, and rates are likely to remain above historical averages even if further softening occurs during the second half of the year.
For shippers, the challenge is no longer simply reacting to disruption, but adapting to a market that operates with less spare capacity and a permanently higher cost base.
Metro's air freight specialists work with customers every day to secure capacity, manage costs and build resilience into critical supply chains. If your business is facing rising airfreight costs, constrained space or time-sensitive challenges, EMAIL our Managing Director, Andrew Smith, directly.
