Air freight shippers are demonstrating a clear preference for shorter-term contractual agreements, according to recent data from Xeneta. In the third quarter, three-month contracts constituted 60% of all new shipper agreements, marking a notable increase from 47% in the second quarter. This trend indicates a strategic move by shippers to avoid long-term commitments in a volatile market.
This shift is primarily driven by the current unpredictability in air cargo rates and capacity. Shippers are hesitant to lock into fixed prices for extended periods, fearing they might miss out on potential rate reductions or find themselves overpaying if the market softens. The global economic outlook and geopolitical events continue to introduce uncertainty, making flexibility a priority.
For freight forwarders and logistics professionals, this trend means a more dynamic and less predictable contracting environment. Forwarders may face challenges in securing long-term capacity from airlines if their own commitments to shippers are short-term. This could lead to more spot market activity, potentially increasing operational complexity and requiring more agile pricing and capacity management strategies. Shippers, on the other hand, gain greater flexibility to adapt to market changes, but may also face higher rates or reduced capacity during peak demand periods if they do not secure sufficient short-term agreements.
While the source does not explicitly state what's next, the continued preference for shorter contracts suggests that market volatility is expected to persist, at least in the near term. Both shippers and forwarders will likely continue to navigate this environment by prioritizing flexibility and responsiveness in their air freight procurement and sales strategies.
