If you signed an annual air freight contract this year, you already know how little cover it gives you. Xeneta says market conditions have moved in favour of airlines and forwarders, and the 12-month deals that used to hold your rates steady are getting harder to defend on either side of the table. Adi Šunj, Xeneta's lead customer success manager, told a recent webinar that a tightening market and heavier reliance on spot buying are forcing shippers and forwarders to rethink how they price anything longer than a quarter. For anyone budgeting airfreight for the next two quarters, that changes the maths.
What Happened
Speaking on a Xeneta webinar, Šunj set out the threshold the analyst firm watches to call which way the market leans. "We typically define 80% as the shifting point between a buyer's market" and a sellers' market, he said, referring to the share of volume moving on long-term contracts versus spot. When contract coverage holds high, buyers hold the leverage. When capacity tightens and more freight goes to spot, the leverage moves to the sell side.
That is the pattern Xeneta is describing now. Spot purchasing is taking a bigger slice of the market, and airlines and forwarders are less willing to lock in a fixed number for a full year. Forwarders sit in the awkward middle: they commit to shippers at one price while buying capacity that keeps repricing underneath them. The result is fewer clean annual deals and more agreements that get reopened, indexed, or quietly renegotiated when the market moves.
Impact on Freight Rates and Operations
The practical effect is that your contract rate stops being a ceiling and starts being a starting point. In a tight market, allocation goes to whoever pays today, so a low contract number with no volume commitment behind it tends to get skipped when space runs short. You get the rate on paper and the rollover in practice.
Budgeting gets harder too. If a meaningful share of your volume ends up on spot, your landed cost per kilo moves week to week, and the finance team finds out after the fact. Operations feel it as booking lead times stretching and as more shipments splitting across flights. Forwarders, for their part, are shortening validity windows, asking for tighter volume forecasts, and pushing surcharge clauses that pass fuel and capacity swings straight through to you.
What Shippers Should Do
- Split your volume deliberately. Put your predictable base on contract and accept that peaks will price at spot. Guessing at a single annual number for all of it is how budgets break.
- Trade commitment for priority. Airlines and forwarders reward firm, forecastable volume. A realistic committed tonnage is worth more to you than a headline rate you cannot fill.
- Shorten the contract cycle. Quarterly or six-month agreements with a review clause beat a 12-month deal that both sides stop honouring by month four.
- Track your own spot exposure weekly. If you do not know what percentage of your kilos moved off-contract last month, you cannot tell whether your deal is working.
- Fix your chargeable weight data first. Density errors cost you on every booking, and in a sellers' market nobody is absorbing them for you.
Key Takeaway
Once spot buying pushes past Xeneta's 80% marker, the annual air freight contract stops setting your cost and starts setting your expectations, so plan your budget around a rate range, not a single number.
Plan Your Shipment: Calculate your costs with our free Chargeable Weight Calculator and Air Freight Calculator.
Source: The Loadstar