AIR FREIGHT
The air cargo market is entering 2025 with strong momentum, though seasonal fluctuations from the Chinese New Year and shifting trade dynamics are creating a complex environment. Air cargo capacity globally is 5% higher than last year, with Asia-Europe routes up 14% and Asia-North America up 11%. However, transatlantic and intra-North America capacity have contracted, reflecting shifts in demand. Notably, belly capacity has finally returned to pre-pandemic levels, led by Chinese carriers like Air China, China Eastern, and China Southern, alongside Qatar, Cathay, and Turkish Airlines expansions. Emirates SkyCargo has also increased its freighter fleet by 15%, adding two more 747Fs and expanding routes to Copenhagen, with more 777Fs expected in the next two years.
Rates remain elevated despite the holiday slowdown. Global average airfreight rates are 5% higher year-on-year, with Middle East-South Asia (MESA) surging 33% and Asia Pacific up 11%. Although China-to-Europe tonnages fell 28% week-over-week, the decline in spot rates was minimal, indicating steady European demand. In contrast, China-to-US spot rates dropped 8%, possibly due to the Trump administration’s de minimis import ban, disrupting e-commerce flows. The Baltic Exchange Air Freight Index highlights diverging regional trends, with Shanghai-to-North America rates slipping to $5.17/kg, while transatlantic demand remains strong at $3.17/kg. European exports to the US are holding firm, particularly in high-value sectors like aerospace and automotive, reinforcing the importance of reliable logistics partnerships.
Forwarders and shippers are closely monitoring whether tariffs and geopolitical shifts will lead to sustained changes in trade flows. Southeast Asia benefits from supply chain diversification, with more freighter capacity redeployed to Vietnam, Indonesia, Thailand, and the Philippines to meet rising manufacturing output. This shift is reshaping capacity dynamics, requiring agile adjustments from logistics providers. Meanwhile, e-commerce’s role in air cargo is shifting, with some carriers cutting charter schedules drastically compared to previous years, suggesting a more cautious consumer outlook. Industry experts predict demand patterns will provide more precise insight into how lower-income consumers react to higher tariffs and limited access to cheaper goods within two weeks.
Another key factor influencing air cargo demand is excess retail inventory. US Census Bureau data shows that November retail inventories were $30.2 billion above historical norms, following months of preemptive stockpiling ahead of potential tariff hikes and port disruptions. This buildup of goods—initially meant to counteract supply chain volatility—could now soften airfreight demand in Q1 2025 as companies take a wait-and-see approach to replenishment cycles. Target’s latest earnings report revealed profitability pressures from excess inventory costs, a cautionary tale for retailers overstocking amid global uncertainties.
The need for strategic adaptability has never been more crucial. At the World Cargo Summit in Bruges, logistics leaders emphasized the growing role of 4PL providers in ensuring supply chain resilience. Forwarders must move beyond traditional logistics execution and become advisors, anticipating risks and offering tailored solutions. Customer-centric supply chains, proactive risk management, and real-time visibility will define success in 2025.
ROAD FREIGHT
The European road freight market is reaching a critical juncture as spot rates stabilize following three years of decline from their COVID-era peak. According to the Upply x Ti x IRU European Road Freight Rate Benchmark, Q4 spot rates increased slightly to 123.9 points, a 0.5-point quarter-on-quarter increase, yet one point lower than the previous year. Despite this, spot rates remain 15 points above pre-pandemic levels, indicating a long-term shift in the market.
Analysts suggest that weak demand and rising costs keep rates in check, with the bottoming-out process nearing completion. This means that rates may soon stop declining and could begin to climb again. Unlike spot rates, contract rates have posted two consecutive quarterly increases, reaching 128.9 points in Q4, 5 points higher than spot rates. They have maintained their premium for seven consecutive quarters.
Regionally, France-Germany and Germany-Poland routes followed the general market trend, with contract and spot rates rising. However, the situation on the France-UK corridor diverged, with both contract and spot rates dropping sharply—by 8.2% and 6.3%, respectively. Similarly, the UK-France spot rate declined by 6.9%, while contract rates saw a marginal 0.6% increase, highlighting the impact of Brexit-related trade complexities.
Key industry players indicate that nearshoring trends and evolving CO₂ regulations could exert upward pressure on rates in the medium to long term, particularly as demand shifts toward more sustainable transportation solutions. Labor costs and limited capacity remain key challenges, with even minor cost fluctuations or supply chain disruptions triggering price shifts.
The European road freight market is caught in a delicate balance: weak consumer demand prevents rates from rising too fast, while high costs and capacity constraints keep them from falling too far. This creates a volatile environment where any disruption could quickly push prices higher.
SEA FREIGHT
The sea freight market has entered a turbulent phase, with spot rates declining across major routes even as carriers attempt to manage capacity. The Shanghai Containerized Freight Index (SCFI) reported across-the-board rate drops, except for a 10% increase on China-Mexico routes. Notably, China-North Europe fell by 16%, China-Mediterranean by 5%, and China-US West and East Coasts by 5%. Drewry’s World Container Index (WCI) followed a similar pattern, with Shanghai-Rotterdam rates down 5% to $3,125 per 40ft, a 29% year-on-year decline, and Shanghai-Genoa down 4% to $4,236 per 40ft.
Despite these declines, long-term rates remain relatively high as shippers prioritize securing space amid ongoing geopolitical risks, trade policy uncertainties, and supply chain disruptions. Some forwarders offer much lower spot rates, with quotes as low as $2,300 per 40ft from Shanghai to Los Angeles, well below official WCI levels. This post-Chinese New Year softening is driven by weak demand and surplus capacity, with Xeneta data predicting a surge in blank sailings—up 318% on Far East-Mediterranean and 449% on Far East-North Europe routes—as carriers work to stabilize rates.
At the same time, US containerized imports from Asia hit a record 21.45 million TEU in 2024, with trade patterns reflecting shifting global supply chains. Chinese shipments to the US rose 16%, while ASEAN shipments surged 24% to 5.38 million TEU, reinforcing the manufacturing trend moving away from China. South Asia, including India, also saw a 16% increase to 1.5 million TEU, positioning itself as an emerging garment production hub.
This surge in demand was fueled by early shipments ahead of potential US tariff hikes, the Red Sea crisis extending voyage times, and concerns over industrial action at US ports. The transpacific trade, in particular, remained resilient, with 100% vessel utilization on Asia-North America services for the last nine months, as reported by Japanese carrier ONE. However, US retailers are now sitting on higher-than-usual inventories, which could dampen demand in the coming months.
Carriers are responding with general rate increases (GRIs) of $1,000 to $3,000 per 40ft on Asia-US services, set to take effect on February 1, but whether they will hold remains uncertain. MSC and CMA CGM have also announced a $1,000 per 40ft peak season surcharge on westbound transatlantic shipments from March 1. If sustained, these measures could help counteract the current rate slide.
Despite the softening supply-demand balance, ONE remains cautiously optimistic, forecasting $19 billion in full-year revenue and $4 billion in net profit, a 30% improvement over 2023. However, the company expects a temporary lull due to the traditional post-holiday slack season, with recovery anticipated after the Lunar New Year. Analysts warn that capacity management will be key to maintaining stable rates, especially as new services from alliances indirectly absorb excess vessel supply.
With uncertainties looming—from US trade policies to shifting manufacturing bases and potential port disruptions—flexibility in freight procurement strategies remains critical. Shippers who balance long-term contracts with selective spot market engagement will be best positioned to navigate this volatile environment.
RAIL FREIGHT
China-EU rail freight has made a strong comeback after two years of decline, with westbound volumes soaring by 130% in 2024, primarily fueled by the Red Sea crisis. As ocean freight disruptions caused by Houthi attacks forced supply chains to find alternative routes, rail transport between China and Europe re-emerged as a competitive solution.
According to the European Rail Alliance, total China-Europe rail freight volumes increased by 80.2% year-on-year, reaching 330,700 TEU westbound, while eastbound shipments fell by 26.7% to 49,730 TEU, marking the lowest level since 2017. This decline in eastbound volumes suggests that while rail has gained popularity for exports from China, European exports to China remain sluggish due to weaker demand and manufacturing struggles across the continent.
The Upply supply chain analytics platform noted that the surge in rail traffic was largely driven by high ocean freight rates, which made rail more price-competitive than sea transport. However, experts warn that this advantage may be temporary. If stability returns to the Red Sea and ocean freight rates drop, rail freight could again struggle to maintain its market share.
Nonetheless, China’s exports to Europe saw steady growth, rising 3% year-on-year, reaching $516.6 billion in total trade value, according to Chinese Customs. One of the most significant contributors to this growth was China’s vehicle exports, which surged 192% to 31,304 TEU, representing 9.5% of the total westbound flow. This shift could have long-term implications, especially as U.S.-China tensions push Europe and China into closer economic ties.
One of the biggest beneficiaries of this rail boom has been Poland, which solidified its position as China’s main rail freight gateway to Europe, handling 88% of the total volume (292,950 TEU). This represents a 149% year-on-year increase, maintaining Poland’s dominance over Germany, which saw its rail imports from China collapse in 2021 and recover only slightly in 2024, reaching just 23,790 TEU—an “historic low.”
While China-EU rail freight has enjoyed a resurgence, its long-term sustainability remains uncertain. Once Red Sea disruptions subside, the sector needs further operational improvements, cost efficiency, and service reliability to compete with maritime shipping. However, rail has now become a critical alternative for shippers looking to bypass ocean freight instability and secure faster delivery times for high-value goods.
For businesses relying on resilient supply chain solutions, WIIMA’s expertise in 4PL rail freight management ensures seamless multimodal logistics, helping companies navigate uncertainty and capitalize on Europe’s evolving trade routes.
ABOUT US
Wiima Logistics is a provider of fourth-party logistics (4PL) services. The 4PL service provides the customer with a complete solution for supply chain management, administration and outsourcing.
4PL operations can be described as outsourcing the management and coordination of the entire supply chain – this allows the customer to focus on their core business.
Wiima staff will be more than happy to advise you in supply chain and logistics related matters. Our logistics experts and digital tools will provide you with a winning combination if you are looking for an effective and efficient logistics management setup.
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