The Merchant · n°209 · October 8, 2026

The Merchant - Peak season rolls on, AI fuels air cargo demand

Figure of the week

15%

A series of typhoons hitting Chinese ports this fall has caused so much congestion that 15% to 20% of functional capacity has been removed from the Trans-Pacific trade in October, helping extend peak season.

Quote of the week

“It is quite astonishing that despite increasing fuel costs and tensions across the world, the air freight market just keeps on growing.”

Niall van de Wouw, Xeneta’s chief air freight officer, marvels at how demand for AI-related components has essentially allowed the air freight market to shrug off conditions that could have seen volumes flatten in 2026.

Carriers plan “golden” Q4 as peak season rolls on

Trans-Pacific volumes may be temporarily slowing as a result of Golden Week, but ocean carriers say they are expecting a “remarkable” recovery once the holiday is over. Three ocean carrier executives interviewed by JOC.com believe strong demand on the trans-Pacific is likely to last well past the peak season period and into 2027. “From what we see on [trans-Pacific] trade, and not only TP but all Asian trade, we anticipate a remarkable recovery post-Golden Week,” said one carrier executive. On the one hand the executives admitted that there may be a temporary slowdown in cargo volumes in mid-November and early December. On the other hand, they say disruption at Chinese ports will put upward pressure on rates. That’s because ports are still recovering from the series of typhoons in recent weeks, and congestion as a result of poor weather had effectively removed 15% to 20% of capacity in October compared to September. For this reason, carriers are convinced that their October GRIs are likely to keep rates high. Other analysts are not so sure. Xeneta Chief Analyst Peter Sand believes spot container freight rates from Asia to the US have reached their post-Hormuz crisis peak. While shippers should expect elevated costs through the rest of 2026, rates will descend compared to current levels throughout the rest of the year, he says. “Demand is not strong, and rates have now peaked, but they will not collapse. So shippers should expect to pay elevated freight costs for the remainder of the year,” said Sand. Xeneta expects rates to fall more steeply on the Asia to US East Coast trade than on the West Coast route. This is largely because the East Coast has a higher starting point. Shippers can expect East Coast spot rates in a range of $6,000 to $7,000 per FEU, and West Coast rates around $4,500 to $5,500, Sand says. That’s only one prediction, however. Shippers should bear in mind that the market has proved difficult to call in the post-pandemic period.

AI industry likely to push Q4 air freight market skyward

Air cargo operations in China have largely been on hold until today as a result of Golden Week, but all eyes are on how the market will evolve in the rebound after the holiday. The key is likely to be demand from AI data centers and e-commerce, with the latter expected to be particularly strong and to drive Q4 volumes and rates. With China-US e-commerce having recovered to 17% year-on-year growth, it makes sense that Xeneta is predicting more of the same into Q4. Much hinges, however, on events in the Red Sea and Middle East. More disruption could help push ocean freight rates back up. In that case, it won’t take long for air rates to follow. Overall, then, AI servers, semiconductors and device launches will drive the post-Golden Week rebound while E-commerce will play a smaller but still significant role. IATA Director General Willie Walsh recently told a Xeneta webinar, “There is something like $1 trillion worth of investment in that AI-related sector, which is driving huge demand for air cargo to move those volumes around the world, particularly to North America.” Meanwhile, the high degree of volatility in air cargo markets is changing shipper behavior, according to Xeneta Chief Airfreight Officer Niall van de Wouw. Shippers are largely moving away from long-term capacity deals if they don’t fit current conditions, and are increasingly looking for mechanisms that add flexibility to commercial relationships. A further erosion in long-term contracts is likely during Q4, with adjustable pricing mechanisms becoming more popular.

Sino-US trade thaw pushes supply chains back to China

A thaw in tariff tensions between China and the US could have a far bigger impact on US companies’ sourcing patterns than initially expected. Last week, following Chinese President Xi Jinping’s visit to the US, the two countries announced a new tariff agreement based around a “30 for 30” framework. The deal aimed to reduce tariffs on roughly $30 billion worth of goods from each country. One week later, Washington has not clarified what the new tariff levels will be, nor when the reductions will take place. However, some analysts say that early statements from Beijing indicate that duties on most of the products discussed in the latest tariff negotiations would sink to below 10%. Some products could even face zero duties. Over time this would make sourcing from China considerably more attractive than from manufacturing hubs such as Vietnam, Malaysia and Thailand, which will continue to face higher US tariffs unless they can negotiate new trade deals. Last week The Merchant cited one analyst as saying that the latest Sino-US tariff agreement was just a small pause in a wider trade war. This new view sees it as much more significant. Will the easing of trade tensions with Beijing push more US companies to source from China rather than Southeast Asia? That is becoming an increasingly key question. In September, Reuters wrote that the shrinking tariff spread between China and Southeast Asia was already eroding the incentive for US companies to relocate supply chains. Reuters noted anecdotal evidence of orders drifting away from Southeast Asian countries back towards China. One major reason was that Southeast Asian countries were finding it hard to replicate China’s vast supply chain ecosystem. Buyers had also reported finding it hard to match China’s skilled labor, supplier networks and reliable energy supplies in other Asian manufacturing hubs. Chim Lee, a senior analyst at the Economist Intelligence Unit, also noted that after the Iran war, energy supply has been more stable in China compared to some Southeast Asian countries. Reuters reported US retailer Target to be among those that had moved orders back to Chinese suppliers, though it did not provide the value or duration of the orders. More recently, the South China Morning Post asked, “After the US-China tariff deal, will Chinese factories still need Southeast Asia?” It noted that Chinese manufacturers have, for years, been viewing Southeast Asia as a way to reduce exposure to higher US tariffs on Chinese-made goods. The latest tariff cuts on a range of consumer goods from China could weaken that incentive. In the near term, larger companies with production capacity in both China and Southeast Asia may focus on exporting from China. Shippers should keep a close eye on any potential announcements from Washington to clarify exact tariff levels and plan their sourcing strategies accordingly.

❓ Got a question about your flows? We answer it in an upcoming edition.

Did you know?

US ports are exploring the use of next-generation nuclear power sources, such as small modular reactors and microreactors. The American Association of Port Authorities conference this week heard that modular nuclear power sources could help support the expansion of US ports which are expecting to need up to two or three times their current energy supply within 20 years. Some microreactors are small enough to fit in the bed of a pickup truck.

Sources

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