With Red Sea disruption not abating, and fears of tariffs and labor stoppages mount, air freight rates are on the rise as volume shifts from longer ocean transits. Meanwhile, truckload overcapacity is keeping contract rates down, while analysts are seeing an inflection point in spot rates. And logistics companies continue to invest in Mexican reshoring, even amid infrastructure concerns. Here’s more on the latest news in logistics and transportation.
Air Cargo Surges, Rates Increase
Demand for air freight is pushing rates higher as e-commerce growth and longer ocean transit times force shippers to lean more heavily on air transport. Air freight demand based on chargeable weight rose 13% in June compared to last year, according to data analytics platform Xeneta. And WorldACD, another air cargo data provider, said worldwide tonnage was up 11% in June, with spot and contract rates up 68% from 2023; increases were much higher for flights originating in Asia.
Rates are expected to remain elevated through the rest of the year, according to the DHL Hong Kong Air Trade Leading Index, per the Journal of Commerce (subscription required). The drivers are demand from European and U.S. markets, front-loading to avoid potential import tariffs in the U.S., and e-commerce orders out of China. Tariffs plus the ongoing Red Sea disruption will continue to put “upward pressure” on air freight rates, said Edmond Lai, chief digital officer of the Hong Kong Productivity Council.
A freight forwarder told The Loadstar that “air freight from southeast Asian hotspots might climb to $10 a kilo in August.” The CrowdStrike IT blackout, which grounded flights worldwide, only exacerbated the capacity issue.
Truckload Volumes Still At Overcapacity, But Spot Rates Expected to Rise
Overcapacity in the truckload sector continues to keep contract rates down, but spot rates may have reached an inflection point. According to the Journal of Commerce (subscription required), the U.S. long-haul truckload producer price index is down 3.6% year-over-year. This is leaving carriers uncertain about their second-half prospects, and shippers are having a harder time than usual forecasting volumes.
Shelley Simpson, CEO of J.B. Hunt Transport Services, said today's economics are different than during the last great recession in 2008 and 2009, to the detriment of carriers. Then, she said, costs went down alongside prices. Now, operating costs rise even as rates fall.
“Really, this is the first time I’ve seen that,” Simpson said per the JOC.
XPO Latest to Up Investment in Mexico Nearshoring
Less-than-truckload carrier XPO has expanded its cross-border service into Mexico, adding capacity, coverage and technology in response to growing demand as more companies nearshore to de-risk their supply chain.
The service utilizes seven border-crossing points and covers 99% of Mexican postal codes. It represents a significant increase in capacity, real-time tracking, and a bilingual concierge desk
A joint U.S.-Mexico technology alliance has been formed to help support the growth of nearshoring south of the border. Six tech companies in the logistics sector have come together to “tackle critical industry challenges in logistics, procurement, supply chain tech, modern finance, and manufacturing in the US-Mexico trade lane.”
Other logistics providers that have expanded in Mexico to address growing demand include DHL Express Mexico. Last year, the company invested $180 million in new facilities at airports in Mexico City and Querétaro. Still, concerns linger about infrastructure, including a power grid that’s reaching its peak.
Atlas Air Expands Fleet As It Unwinds Amazon Partnership
Atlas Air plans to acquire three Boeing 747-400 air freighters to support its growing e-commerce business. The carrier is in the process of downsizing its relationship with Amazon, which dates to 2016, to pursue more profitable business with the likes of Shein and Temu.
Atlas will no longer pilot and maintain aircraft for Amazon for domestic parcel delivery as of March 2025. However, it will extend leases on 16 Boeing B767s owned and operated by Atlas, which Amazon can then transfer to another shipper.
Walmart CFO: Robots Actually Extend Warehouse Careers
Walmart is turning the traditional argument against warehouse automation and robots on its head. While workers fear it will eliminate their jobs, Walmart’s CEO recently told investors that automation and robotics can actually extend their careers.
This is due to the obvious fact that automation reduces the lifting, carrying, and walking for miles that warehouse associates have to do every day, which increases the likelihood of repetitive motion injuries.
"That's something that we're very focused on – doing this automation in a very associate-friendly way that becomes a complement to what they're doing and actually enhances their overall job experience,” said Walmart CFO John David Rainey at a Bank of America investor conference in London.
The bottom line message: Warehouse workers can keep their jobs longer, and the company gets a fourfold increase in productivity with the same headcount.
With Market Dynamics Shifting, Experience Counts
Air freight rates are surging due to increasing demand and longer ocean transit times, compounded by Red Sea disruptions and tariff concerns. Truckload contract rates remain low due to overcapacity, though spot rates may rise. And companies are investing in reshoring to Mexico, despite infrastructure challenges.
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