Fuel outpaces yields as cargo growth tests freighter economics

Fuel prices rose 111% year on year in the final week of September, outpacing a 26% increase in global air cargo yields, according to Rotate data presented at TIACA’s Air Cargo Forum in Miami.

The yield comparison uses Xeneta data. Rotate CEO Ryan Keyrouse said: “Airlines are feeling quite a bit of pressure when it comes to fuel prices, right now.” His warning applies most directly to freighter operations, where Rotate’s modeling of Boeing 777 freighter economics showed the gap between revenue and costs narrowing.

Fuel prices fell during the Middle East ceasefire before rising again, while yields had broadly stabilized. Keyrouse said some trade lanes had become uneconomic, but his figures were modeled flight contributions rather than reported airline profits.

Why did cargo growth not repair the squeeze?

Rotate’s September estimates put the Asia-North America Boeing 777 freighter contribution at a positive $2.55 per kilogram, against negative $2.12 per kilogram in the reverse direction. One direction can support a flight; the other can consume its margin.

The yield gains also remained uneven across major markets. All figures covered the final week of September and compared year on year:

• Europe-Middle East: up 56%
• Asia-North America: up 30%
• Asia-Middle East: up 24%
• Europe-North America: up 19%
• Asia-Europe: up 17%

Rotate described the preceding 36 months as a historically healthy period for air cargo supply and demand. Average demand growth reached approximately 9%, against capacity growth of about 5%. That reversed the pattern seen during much of the period before 2020, when capacity expansion outpaced demand.

Growth has since become more concentrated by geography and commodity. China’s share of global air cargo exports increased from 27% to 34%. Ecommerce and AI-related cargo accounted for roughly two-thirds of demand growth over the past couple of years.

Keyrouse said AI could contribute more as movements of machinery and power-generation equipment increased. The mix has deepened the imbalance between Asian exports and return flows. Carriers must support weaker backhauls while absorbing higher fuel bills across the network.

Can the forecast restore balance?

Rotate expects average year-on-year global demand growth of 3.1% in the fourth quarter of 2026, followed by 5.1% in the first half of 2027. It identifies Chinese ecommerce exports to the US, AI-related technology exports from Taiwan and South-East Asia to the US, and increasing intra-Asia trade as the main drivers.

Industry sentiment remained comparatively strong. Seventy percent of respondents to Rotate’s sentiment index expected that year’s peak season would be at least as good as 2025’s.

Over the next 12 months, Rotate expects demand growth of around 3.3%, broadly matching capacity expansion of approximately 3%. Freighter deliveries and conversions would drive much of the additional supply, with retirements also factored into the estimate.

Rotate did not disclose delivery or conversion totals, so its 3% capacity forecast cannot be checked against an aircraft-by-aircraft schedule. Nor can the modeled trade-lane contributions be treated as evidence of reported airline profitability.

“Yes, next year there will be a global balance between supply and demand, but that is not at a tradelane level,” Keyrouse said. Airlines and other companies would compete for opportunities on different trade lanes.

What does this change for airlines and forwarders?

For airlines, a balanced global market does not make every deployment viable. New freighter capacity may increase available tonnage without improving directional margins. Network planners must assess each trade lane and its return leg rather than rely on aggregate demand figures.

For forwarders, service reliability retains clear commercial value. Shippers are prepared to provide more freight to operators that help them through disruption. Execution during constrained periods can therefore win market share even when freight yields fall behind fuel costs.

Rotate’s next-12-month forecast has demand growing around 3.3% against roughly 3% capacity. The trade-lane mix will decide whether that added traffic produces profit rather than another round of network losses.