The News
Air shippers have stopped signing fixed annual rates. Only 25% of new air freight contracts in the third quarter ran a full year, down from 40% a year earlier, according to Xeneta, which tracks freight rates.
Instead, contracts of three months or less made up 60% of new deals, up from 25%. Deals longer than a year almost disappeared, at 3%.
“A one-year fixed rate deal doesn’t fit the current conditions,” said Niall van de Wouw, Xeneta’s chief airfreight officer.
Why It Matters
Shippers are giving up fixed rates while prices are rising, because jet fuel has roughly doubled since the conflict began and no one can say where it goes next.
So the buyer writing 2027 terms has a bigger problem than contract length. A three-month deal reprices four times a year, which means the shipper still pays for every jump in fuel, up to three months later.
Ocean freight buyers face the same squeeze, because spot rates on the main transpacific lanes have more than doubled since May. That is why Hapag-Lloyd raised its 2026 profit forecast for the second time since July.
By The Numbers
Fuel: Jet fuel cost $157 a barrel in August, 79% more than a year earlier, IATA says.
Demand: Air cargo volumes rose 6% in September, three times faster than capacity.
Rates: Spot rates averaged $3.10 a kilo in September, 27% higher than a year earlier.
That adds up to fuller planes, higher rates and a fuel bill that has nearly doubled. A 12-month fixed price would have to cover all of it.
How It Works
Air freight is usually priced as a base rate per kilo plus a fuel surcharge. In an annual contract, the base rate stays fixed while the surcharge moves with jet fuel.
Shippers now want the base rate to move too. Xeneta says they are building “floating mechanisms” with their forwarders, tied to “the all-in rates airlines are charging freight forwarders” rather than to fuel alone.
Shippers are writing that into contracts two ways:
An index: The contract names a rate index and how often the price resets against it. Xeneta and Freightos both publish air rate indexes. Freightos sells a toolkit that ties contract prices to its own.
A re-opener: A clause lets either side renegotiate once rates move past a set point. Carriers want it to trigger when rates rise, while shippers want it to trigger when rates fall, Xeneta chief analyst Peter Sand has said.
Pushback
Going short has two catches:
Less space: A three-month contract promises no space past the quarter. With demand growing three times faster than capacity, the shipper goes into peak season bidding for room.
One source: The push for index-linked prices comes from a company that sells the indexes. Xeneta’s data is the only public count of this shift so far.
So the flexibility is real, but it is paid for in capacity.
What’s Next
Fourth-quarter contract data will show whether shippers carry the three-month habit into their 2027 awards, while fuel decides what they pay. If jet fuel falls, a three-month deal gets cheaper within a quarter. A fixed annual rate signed today would lock in this year’s prices for all of 2027.
