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Demand still outpacing capacity as AI traffic bolsters air cargo market

Global air cargo demand strengthened again last month, as Middle Eastern hub operations began recovering from the recent geopolitical disruption - although capacity growth continued to lag demand, reinforcing a tighter market and preserving pricing power for airlines. According to the latest IATA data, industry-wide cargo tonne km (CTK) rose 8.5% year on year in June, while international cargo traffic increased 9.6%. North American carriers led the growth overall, but the sharpest improvement came from Middle Eastern airlines, whose international traffic was up 5.6% year on year, as transfer traffic gradually resumed through regional hubs. However, IATA noted that recovery remained uneven, and Europe-Middle East traffic contracted 41.1% year on year, while Middle East-Asia volumes also remained in decline. Demand was largely driven by "urgent inventory movements of AI and semiconductor cargo" - Asia-North America traffic, the largest air cargo corridor, grew 14.7%, extending its run of monthly growth. Those findings mirror observations from Xeneta, whose air freight specialists said during a recent webinar that demand linked to AI infrastructure continued to support elevated freight markets. "The crisis is not over, and it's also buoyed by the great demand for AI shipments - we're talking server equipment, everything that you need in the AI boom the world is experiencing right now," said the intelligence platform. While demand accelerated, IATA data showed available cargo tonne km (ACTK) increased only 4.4%, lifting the industry's cargo load factor by 1.8 percentage points, to 46.9%. This tighter supply-demand balance has shifted negotiating leverage from shippers, with Xeneta warning that as market conditions tightened, shippers with aggressively priced long-term contracts may struggle to secure the same service levels. For forwarders, the challenge is amplified by greater reliance on spot purchasing. Xeneta said higher spot market participation made it increasingly difficult to support fixed-price annual contracts. "We've seen over time that when the airline spot share rises above 40% to 50%, then it becomes not just significant pressure for the forwarder to move and buy their cargo, but also to align their contracts with their customers," said Xeneta. Matthew Gore, partner at law firm HFW, told The Loadstar most of the shipper-freight forwarder air freight agreements he'd overseen typically had a quarterly rather than annual validity. "Some also have a master framework/service order (call-off) structure allowing shippers to contract for different periods at different times, and for different lanes, etc," he explained. Mark Chadwick, president of the Global Shipper's Association, suggested air freight contracts could benefit from a similar mechanism to index-linking, but with an index that "indicates a trend at which you trigger a discussion". He explained: "Like we saw with the China outbound in the ecommerce peak. All of the indices showed rates through the roof; that gave us the kind of openness to have a conversation to talk about that price. "Using it as a trend is a trigger rather than a lockout, so if it goes up 10%, your rates go up 10%," Mr Chadwick told The Loadstar. Although air cargo yields eased 1.2% month on month in June - the first sequential decline after two months of increases - IATA noted that yields remained 34% higher than a year ago, while jet fuel prices were still nearly 46% higher. The association said the recent fall in yields should be viewed as 'easing from a short-term peak' rather than a return to normal pricing conditions, with aircraft continuing to fill faster than airlines can add capacity.

OceanX: Turkey delight - what delight for forwarders?

Brief family trip to beautiful Cappadocia, with short stopover to catch up with OceanX members and friends in Istanbul. Apart from a few transits at IST airport, haven't been since September 2019 so it's great to be back again. First thing first: back then, the Turkish Lira stood at about 5.7 for 1 US$, on July 31 this year it hit another record low, 47.5 (and inflation is expected to still be at 25%-plus this year).

CH Robinson says AI already paying dividends as rivals focus on resilience

Just days after Kuehne+Nagel told investors artificial intelligence could generate Sfr100m-150m ($123m-$184m) in annual productivity gains by the end of 2027, CH Robinson has gone a step further, claiming the technology is already delivering measurable operational and financial benefits. The US forwarder devoted much of its second-quarter earnings call to AI, repeatedly linking it to productivity improvements, margin expansion and market share gains. Yet results from fellow forwarders Logwin and Geodis, also published this week, made little mention of the technology, instead highlighting resilient operations, network expansion, and customer demand. "We achieved [these results] through disciplined execution of our Lean AI strategy, which has enabled us to identify and remove waste and to automate manual processes in the quote-to-cash life cycle of an order," CH Robinson CEO Dave Bozeman told analysts. "The result has been evergreen productivity improvements of over 60% since the end of 2022 in both North American Surface Transportation (NAST) and Global Forwarding." Mr Bozeman said the strategy had created "a scalable model with significant operating leverage", helping the company increase adjusted operating income by nearly 20% year on year, while improving customer service and extending its market share gains in NAST to a 13th consecutive quarter. Chief strategy and innovation officer Arun Rajan said the company's competitive advantage lay not simply in 'using' AI. "Our AI agents are powered by proprietary data, deep logistics expertise, and an engineered context layer that simply cannot be purchased or built overnight," he said. "We don't just treat AI as another tool. We make it part of how we run the business." Rather than relying on a single autonomous system, CH Robinson said it had "hundreds of AI agents trained to perform very specific jobs across the shipment life cycle, with defined responsibilities, clear guardrails, and access to the operational context needed to do those jobs well". Mr Rajan added: "Humans remain in the loop where judgment, exception management, and customer nuance matter most." The company also highlighted what it claimed was the world's first "closed-loop agentic logistics system", combining AI planning and engineering tools to assess entire supply chains in 25 to 30 minutes, rather than four weeks. Meanwhile, the differing narratives came as all three companies reported respectable financial performances. CH Robinson increased second-quarter revenue by 19.3% year on year, to $4.9bn, which it credited to higher pricing in truckload, LTL and air and ocean. Adjusted gross profit rose 6.5%, to $738m, and adjusted operating income climbed 20%. Both its NAST and Global Forwarding divisions achieved their "mid-cycle operating margin targets", enabling the company to reaffirm its full-year operating income guidance. Global Forwarding revenue rose 12.4%, to $896.6m, owing to higher pricing, while adjusted gross profit increased just 0.7%, to $188.8m. Ocean gross profits fell 2.8%, as profit per shipment dropped 4%. Air gross profit went up 23.4%, with a 33.5% increase in profit per tonne - although it shipped 7.5% fewer tonnes. Geodis did not publish full results, but did disclose revenues of €5.3bn - although underlying revenue was down 1.4% at constant scope and exchange rates. It maintained an EBITDA margin of 10%, despite what it described as an uncertain market environment. The French logistics group highlighted its investments in healthcare logistics, its Le Havre logistics hub, acquisitions, and customer-facing digital services - but AI was largely absent from its results presentation. The contrast illustrates how differently major logistics providers are choosing to present themselves to investors and the market. While K+N is beginning to quantify the productivity gains it expects AI to deliver, CH Robinson's gains are already showing in its results. Logwin and Geodis focused on network expansion, operational resilience, and navigating volatile freight markets. Logwin reported first-half revenue of €737.4m, up 6.5% year on year, driven by stronger air and ocean freight business and higher freight rates. However, EBITA fell, from €42.5m to €38m, as competitive pressures squeezed margins. Some forwarders continue to focus on networks and resilience; others increasingly want to be seen as technology-first companies that move freight.