Air cargo rates have been on an uptrend in the last three weeks, according to a new Freightos analysis, but peak season expectations have yet to materialise.

The online freight shipping marketplace and platform said in a report that air cargo rates between the Middle East and North America have climbed 22% in the last three weeks to US$3.78/kg, a high for the year.

"This increase may reflect a peak season bump on this lane as Thanksgiving approaches and that some shippers are opting for sea-air transport from the Far East instead of direct air shipments, possibly to avoid the higher rates and tight capacity out of China due to the e-commerce surge," Judah Levine, head of research at Freightos.

Middle East - Europe rates have remained steady at US$2.00/kg.

China - North America rates have been at about US$7.00/kg — a high for the year — since late October, a 17% increase from the e-commerce volume-driven US$6.00/kg level they've held for much of the year.

And at US$4.00/kg, China-Europe rates are just 6% higher than a month ago.

"Many were expecting rates on these lanes to have spiked, possibly to extreme highs, by now, given the demand strength and strain on capacity seen even during the typical slow season this year. But carriers and forwarders report that though they remain very busy, they aren't seeing peak conditions yet, and may not see much worse than current conditions as shippers planned and adjusted in advance to avoid peak season air cargo chaos," Levine added.

The report noted that transatlantic rates have increased about 45% since mid-October to US$2.60/kg, a 45% gain compared to last year and their highest level since early 2023 — reflecting a reduction in capacity as carriers introduced winter passenger schedules as well as some shift of freighter capacity to ex-Asia routes.

Meanwhile, Freightos noted that last week, Canada's Labor Minister ended the separate labour disputes — one on each coast — that had resulted in lockouts at Canada's major container ports.

The Industrial Relations Board ordered operations to resume in Vancouver, Prince Rupert and Montreal and sent operators and port worker unions to binding arbitration, with ports reopening late last week.

The ILWU Local 514 in British Columbia has stated they will file legal challenges to these orders, though for now, the disruptions on both coasts are over if not resolved.

For the period, Transpacific ocean rates have been stable for about a month now.

Freightos noted that prices have eased significantly with the close of peak season pressure, with rates of about US$5,400/FEU to both coasts 35% - 45% below peak levels in July.

But when demand eased post the Lunar New Year rush back in April, rates fell back to US$3,000/FEU to the West Coast and US$4,300/FEU to the East Coast, marking the elevated rate floor — still about double 2019 levels — on this lane for the Red Sea-diversion era.

Levine noted that prices remaining significantly higher than in April may point to stronger than normal demand for this time of year due to shippers frontloading ahead of expected sharp tariff increases from the incoming US administration and a possible ILA strike at East Coast and Gulf ports after January 15.

"And with Lunar New Year starting earlier than usual at the end of January this year, rates may face some additional pressure starting in late December or early January," he added.

Levine noted that the unusual parity of transpacific rates to both coasts may indicate a shift of demand to the West Coast due to January strike concerns.

The ILA and USMX held face to face negotiations for the first time since June last week, but talks quickly collapsed as the parties remain far apart on the role automation and semi-automation will be allowed to play at the ports, increasing concern that a new contract won’t be finalized before the January deadline.

Asia-Europe ocean rates — which, without strike or tariff concerns, had fallen back to April levels by mid-October — increased by about 30% to start the month as carriers introduced GRIs (General Rate Increase), and so far, those levels have stuck.

"And though some mid-month GRIs don't seem to have taken yet, some carriers have also announced December increases aiming to push rates past the US$6,000/FEU mark as an early start to the Lunar New Year rush may get underway," Levine said.

He added that carriers are particularly motivated to see prices increase on this lane as they enter tendering season for next year's annual contracts with Asia-Europe BCOs.

Carriers are also adjusting their port call rotations on this lane in preparation for the alliance reshuffles that will take effect in February.