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'Don't jump on early fixed-rate ocean contract offers', shippers advised

Shippers should resist the temptation to lock themselves into annual ocean freight contracts too early, according to Flexport, as the current rate spike could be nearing its peak. During a market webinar, the digital forwarder said importers should avoid committing to the first contract offers by carriers, arguing that seasonal demand will ease from mid-August, and pricing should follow. "We expect we are now on top of the mountain, so we will see some stabilisation coming until probably mid-August," said Guillaume Caill, head of ocean EMEA at Flexport. He added that from mid-August until China's Golden Week in early October, Flexport anticipates that the "usual seasonality" will trigger a rate decline. "We see a declining wave in terms of price developments, and we do hope that by September we will also not have any space issues." He explained that stronger-than-expected demand, early Christmas restocking and longer voyage times around the Cape of Good Hope had kept capacity tight through June and July, but the space constraints should ease by September. "Do not jump on the first fixed rate that comes to you," advised Mr Caill. "There will be better opportunities coming up in September, normally." However, he warned that "a fixed contract is never totally fixed", and recommended a mix of fixed, floating, and index-linked agreements. Meanwhile, BCO consortium ShiftX argued that today's geopolitical volatility strengthened the case for long-term carrier contracts, rather than waiting for the spot market to soften. And while Flexport recommended shippers to delay commitments until seasonal conditions improved, ShiftX argued that predictability now carried more value than trying to time the market. ShiftX UK MD Keith Gaskin explained that the past five years had demonstrated that supply chain disruption had become structural, rather than cyclical, adding: "It's not a question of if there's going to be another global crisis affecting shipping; it's when," he said. ShiftX, which pools members' container volumes to negotiate annual contracts with six major carriers, said long-term agreements had protected customers from the sharp increases seen on the spot market since the Middle East crisis escalated. Mr Gaskin acknowledged rates were likely to soften towards late August and September, but warned any decline could prove short-lived, with Golden Week, Chinese New Year, and continued geopolitical instability all likely to inject fresh volatility into the market. Flexport also cautioned that the geopolitical picture remained highly uncertain. It said "today, there is no safe passage in Hormuz", while Red Sea transits remained well below pre-crisis levels, despite a small number of carriers cautiously returning services. "We don't foresee full-force return through the Red Sea before 2027," it added.

Turkish Cargo selects Lödige Industries for terminal expansion

Turkish Cargo has selected Lödige Industries to provide automation and digital technology for its Istanbul terminal expansion. Earlier this year, the Istanbul-hubbed airline announced plans for the second phase of its SMARTIST air cargo terminal that will see capacity more than double from 2m tons per year to 4.5m tons. And it was today revealed that Turkish has partnered with Lödige Industries on automated handling technology at the SMARTIST 2 facility. The second-phase development will feature a six-level high-bay storage system offering 1,562 ULD positions, with nine 15 ft Elevating Transfer Vehicles and ten 15 ft transfer vehicles. The setup will also include 23 10 ft Elevating Workstations and two 20 ft Elevating Workstations designed for "ergonomic and efficient ULD handling". The solution is complemented by 22 tilting decks, 76 right-angle decks, two 20 ft truck docks, and almost 1.000 powered roller decks. Murat Yalçın Kirca, cargo operations global, vice president at Turkish Cargo, said: "With SMARTIST 2, Turkish Cargo's ambition goes far beyond adding capacity. We continue to strengthen our role in global air freight through intelligent infrastructure. "The next-generation cargo facility allows us to manage growing volumes without disrupting our operational flow, ensuring an uninterrupted service quality for our customers worldwide. This approach is supported by Lödige Industries' expertise in advanced cargo handling systems." Work is planned to be completed gradually during the 2027-2028 period. Inaugurated in February 2022, SmartIST currently has an annual handling capacity of 2.2m tonnes. The facility includes specialised facilities such as temperature-controlled cold storage zones, dedicated pharmaceutical areas and designated sections for hazardous and radioactive materials.

Middle East premium fades - but AI boom keeps air freight rates aloft

Air freight markets appear to be settling, with capacity largely returned to the Gulf, fuel prices easing, and freight rates gradually drifting lower. Yet rates remain stubbornly high by historical standards, despite widespread expectations that the market would cool significantly in the second half. A changing mix in demand, with AI-related shipments increasingly replacing ecommerce as air cargo's primary growth engine, are adding to rate strength. Meanwhile, the picture has become more nuanced following the collapse of the ceasefire. Renewed drone attacks have again raised concerns over the region, but so far airlines appear to have made relatively few operational changes, allowing capacity to continue recovering. WorldACD figures for the week ending 5 July show worldwide average air cargo rates falling a further 1% week on week, to $3.13 per kg, following a 2% decline the previous week. Average spot rates slipped 2%, to $3.62 per kg. Xeneta's June market update points in the same direction. Global spot rates remained 38% higher than a year earlier, averaging $3.40 per kg, but the pace of growth slowed from 41% in May as capacity returned through the Middle East and jet fuel prices retreated. "The air freight market has kept on moving and showing its ability to navigate uncertainty," said Xeneta chief airfreight officer Niall van de Wouw. "As we have said before, air freight is not in control of its own destiny, but no one can deny its ability to respond and pivot when challenges come along." Freightos data tells a similar story. Its global air freight index peaked in late May, during the height of Middle East disruption, before steadily easing through June and into July. However, rates remain well above the levels seen at the start of the year, suggesting the market has found a higher floor rather than returning to pre-crisis pricing. Ordinarily, the recovery in capacity would push down rates, but demand has remained strong. According to WorldACD, total worldwide air cargo capacity is now slightly above its level before the conflict began, while the capacity deficit to and from the Middle East and South Asia has narrowed to 10%, from around 30% in early June. And demand continues apace. WorldACD recorded worldwide chargeable weight 4% above last year's level, while Xeneta said global demand grew 7% year on year in June, comfortably outpacing capacity growth of 3%. That imbalance pushed Xeneta's dynamic load factor three percentage points higher, to 62%. The biggest change is where that demand emanates. For much of the past three years, cross-border ecommerce has been the dominant force behind air cargo growth - a picture now changing rapidly, with ecommerce in decline. Xeneta added that "part of the apparent decline may reflect a shift rather than a disappearance of volumes as individual B2C parcels are being moved into bulk, consolidated air freight shipments that fall outside the ecommerce parcel data. But the underlying trend is clear. After years as air freight's single biggest growth pillar, the B2C e-commerce engine has stalled." WorldACD recorded a 12% week-on-week fall in Hong Kong-Europe tonnages following the EU's decision to abolish its de minimis exemption for imports valued below €150 on 1 July. Combined with declines over the previous fortnight, Hong Kong-Europe traffic has fallen by around 20% in three weeks, returning to levels last seen at the end of March. By contrast, Taiwan-Europe volumes have surged around 20% over the same period, reflecting growing shipments of AI-related computer equipment. "The scale of AI's impact is easy to underestimate because it sits inside a small slice of total air cargo volume," said Mr van de Wouw. "But the facts that confirm its role as the main driver of air cargo growth are undeniable." He pointed to global semiconductor sales, which more than doubled year on year in April, alongside Taiwan's fastest economic growth in almost five decades, driven by demand for advanced chips and AI infrastructure. That argument received further support today from Taiwan Semiconductor Manufacturing, the world's largest contract chipmaker, which reported record June revenue of NT$442.7bn ($15bn), up 67.9% year on year and 6.2% on May. The figures exceeded market expectations and underline the continuing strength of global investment in AI infrastructure, much of which relies on time-sensitive air freight. The shift in demand is already beginning to influence network planning. DHL Global Forwarding has launched a new thrice-weekly Bangkok-Cincinnati freighter service as part of its TransPac Connect offering, providing up to 100 tonnes of capacity per flight. The product also incorporates traffic from Hanoi and Taipei into Cincinnati and Chicago, reflecting South-east Asia's growing role as a manufacturing base and the need for dedicated capacity into North America. Meanwhile, UAE cargo airline SolitAir has expanded its China network with a Tianjin service, following earlier launches to Hong Kong and Urumqi, further strengthening links between Chinese manufacturing centres and the Middle East. The result is a market proving far more resilient than many expected at the start of the year. Ecommerce is clearly losing momentum, but AI appears to be taking its place.