While air freight is not exclusively focused on consumer industries, its position in upstream electronics, for example, is more prominent than in consumer electronics. The United States is primarily driven by D2C e-commerce, which started to plunge in the Q2 of this year. The increase in B2B traffic has yet to offset it.

High inventory levels have hurt both B2B traffic and consumer-facing industries. Inventory dynamics are more significant for air freight than for other modes because shippers use air freight to respond quickly to demand.

There are also negative indications in other verticals focused on airfreight: the semiconductor industry is a typical leading indicator for air cargo, but demand is falling. According to a recent World Semiconductor Market Forecast, growth has slowed to 4.4% this year, down from 26.2% last year, and will decrease to 4.2% next year.

For air freight, healthcare is another industry experiencing a decrease, albeit its once enormous volumes are returning to normal. The ramifications for air freight rates are obvious. The supply of belly freight is likely to increase through 2023. Prices are anticipated to stay sluggish, if not extremely so.

Asia-Pacific, the largest air freight market, is driven by lackluster output, and while there may be hope in the medium term, demand will likely remain flat over the next two quarters. On the other hand, the Middle East is more likely to be affected by the supply side, as heavy belly capacity returns to the region, but “it is unclear where the wave of freighters constructed over the previous few years will end up.”

The issue of newly established and relatively recently established entrants to the air freight sector is crucial and should be considered. Over the past two years, express companies have boosted the size of their massive fleets by double-digit percentages. Companies like Maersk and MSC have invested in the air cargo industry. Because of the high supply, prices look weak in the short- and long term.

In 2023, the equilibrium between supply and demand will be comprised of flat demand mixed with growing supply and higher capacities. The implication is clear: freight rates will continue to decline.


There appear to be nothing shipping companies can do – or are ready to do – to halt the dramatic decline in container spot rates between now and Chinese New Year. Asia-North Europe segment lost further by 10% this week coming down to $1,965 for 40ft. This component has lost 50% of its value in the past four weeks. If the current rate degradation on the trade lane continues, spot rates recorded by the WCI will fall below $750 per teu by the holiday season.

The liner market is officially undergoing a “hard landing,” with the only light at the end of the tunnel being the beginning of the Chinese New Year on January 22nd. The current outlook for the market is for spot rates to bottom out after the Chinese New Year.

If the recession proves to be more profound and prolonged, we can foresee a situation in which demand is muted next year. This will result in a freight spike that does not materialize until Chinese New Year 2024. In either case, the fall will generate massive operational chaos in the coming months as carriers continue to cancel massive sailings to arrest the decline in spot rates.

This week’s Asia Pacific market report from Maersk calls the decline in spot container rates “dramatic” and states that the corporation is adjusting its network “to reflect the new reality.” Meanwhile, on the transpacific, the Freightos Baltic Index (FBX01) reading for Asia to the U.S. west coast fell 26% to $1,430 per 40ft this week, while the spot rate fell 50% in the preceding two weeks. And on the Atlantic side, spot rates are catching up, with FBX03 Asia to the U.S. east coast declining 18% week-over-week to $3,770 per 40 feet.

The store inventories will need to be replenished after U.S. customers spent a record $9.12 billion online on Black Friday this year. These orders might increase trans-Pacific carriers’ bookings and arrest the spot rate decline.


Decreased consumer spending, diesel costs, driver shortages, and drought in Europe all played a crucial part in driving up average European road freight rates in the third quarter. The average European road freight contract rates reached an all-time high in the third quarter of 2022 (129.7 index points), increasing by 5.4 points quarterly and 19.6 points per year. Spot market rates reached 142.6 points, a rise of 6.0 points quarter-over-quarter and 26.4 points year-over-year. However, data from the end of the third quarter indicates that prices softened towards the end of Q3. After reaching a peak in the third quarter, rates on various European routes have begun to soften.

In Europe, spot rates are currently 12.9 points above the contract. The deficit was 12 points in the preceding quarter and 6.1 points in the third quarter of 2021.

Due to the increase, diesel expenses may now account for half of the overall operating costs for transport. Previously, diesel costs accounted for one-third of total operating expenses. It is anticipated that the driver shortage will continue to develop until the end of 2022, with a 40% increase in unfilled truck driver positions.


Russian shippers’ need for rail services has kept China-Europe rates from collapsing while Chinese operators attempt to compete with cheap ocean freight costs. As a result of the invasion of Ukraine, major ocean carriers have stopped calling the country’s ports. This is claimed to have led to an increase in demand from Russian shippers anxious for capacity. Russian shippers, unable to access ocean freight capacity, have sourced their goods from China, and this demand has enabled Chinese rail services to maintain high pricing for European customers.

The largest railway operator in Russia, Russian Railways, has seen its volumes decrease by 10% since the February invasion and lost 125 million tonnes annually. Now they are looking to China and “the east” to combat the “severe difficulties” the company was experiencing.
Chinese operators have prioritized express services, including one that traveled from Xi’an to the United Kingdom in a record-setting 16 days. 



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