Air freight demand remains strong as AI investment, hyperscaler activity, and e-commerce continue to drive volumes across key global trade lanes. With demand outpacing capacity growth and rates remaining elevated, early forecasting and planning are becoming increasingly important for shippers navigating the months ahead.

  • 14 min

Current Position | Weekly Briefing October 28th to November 3rd

The Expeditors Podcast

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You're listening to Current Position, a weekly briefing from Expeditors mapping the shifts across trade compliance, regulatory changes, and global supply chains, plus some market insights from our Senior Vice President of Global Air, Karl Francisco.

I'm Chris Parker, and here's the latest from October 28th to November 3rd. 

Global Customs & Trade Market

• Mexico has removed its 50% undervaluation threshold meaning Mexico customs can seize merchandise if they think it is undervalued. In a decree published October 23, Mexico amended its customs laws, removing the 50% undervaluation threshold that previously triggered the detention of goods. The amendment now allows customs authorities to take enforcement action whenever they believe the declared value of goods is understated. Read more.

• Canada officials have tightened data requirements for consumer products imported under Health Canada. The Canada Border Services Agency (CBSA) has announced upcoming changes including Health Canada matching based on Harmonized System (HS) classification, HC99 for exempt goods and more.  Implementation is expected in February after initial market testing.

• USTR seeks comments on extending the maritime Section 301 suspension. A Federal Register notice requests public comments on a proposal to continue the suspension of certain Section 301 fees on maritime transport services. Read more.

Global Ocean Market

• The potential for a Los Angeles and Long Beach strike threat has been postponed but not yet resolved. The Pacific Maritime Association and ILWU extended negotiations through 5 p.m. Pacific Time on November 4. The extension avoided a walkout threatened for November 1. This dispute involves about 250 watchmen at terminals handling roughly 85% of Long Beach cargo and 33% of Los Angeles cargo. Read more.

• CMA CGM has added a Black Sea war risk surcharge to be implemented beginning Nov. 9. The carrier will apply $35 USD per TEU on all bills of lading issued to move to and from Black Sea ports including Constanța, Varna and Burgas. CMA CGM said this move was based on the Joint War Committee's September designation of the Black Sea as a war risk area. Read more.

• Carriers keep returning to the Red Sea and Suez route. Alphaliner estimates nearly two-thirds of Asia-Europe container capacity has returned to Red Sea/Suez routing, with ZIM now among the carriers. Asia-N. Europe rates rose 3% to $3,551/FEU and Asia-Mediterranean rates rose 8% to $4,252/FEU, although some forwarders do not expect November rate increases to hold. Read more.  

Global Air Market

• Air cargo peak season appears to be underway. The Freightos Air Index shows China-Europe up 12% to $4.35/kg and China-N. America rates up 4% to $7.13/kg in the last week. Daily rates showed further gains, as seasonal demand is building further capacity crunch on top of what has already been strong volumes from the data center and high-tech sector. Read more.

• Continued congestion at Bangkok Suvarnabhumi Airport cargo terminals has forced restrictions that are tightening capacity in and out of the airport. Airlines were asked to reduce inbound cargo volume by 50% through Nov. 7. A further request to avoid additional freighter services has also been placed until further notice. Read more: slides 8-9. 

Global Ground Transport Market

• EU heavy-truck registrations rebound. ACEA data show 205,900 heavy trucks registered in the EU in the first nine months of 2026, up 8.5%, with Poland up 19.5%. France was the only major EU market in decline at 1%, and UK registrations fell 2.3%. Electrically chargeable heavy vehicles rose 59.9% but totaled only 5,120 units. Read more.

• Irish toll increases will raise haulier costs from 1 January 2027. Transport Infrastructure Ireland confirmed that heavier HGVs will pay 20 to 30 cents more per passage on the M50 and the PPP toll roads, citing inflation of 3.6%. The Irish Road Haulage Association has called the rises "extortion" and is considering a protest in Dublin. Read more. 

Up next, Senior Vice President of Global Air, Karl Francisco.

The following discussion could include forward-looking statements. Of course, actual results may differ materially because of various risks and uncertainties. We are not obligated to update these statements, and we rarely do so. Instead, we refer you to our most recent SEC filings for more information about the risk factors that could affect our future results.

Chris Parker: Karl Francisco, it is a pleasure to have you again after, uh, what, three or four weeks or so you've been out traveling around. Uh, what's been going on in your world?

Karl Francisco: Well, it has been quite a while, Chris, since, uh, we last talked. I've been on the road for about six weeks now, uh, hitting all of the major spots in Europe, all of the major spots in Asia, and quite a few spots in the Americas region as well. It's, it's quite a busy time right now and, uh, yeah, it's, it's been crazy for the last, uh, six months I, I'd say.

Chris Parker: Yeah. Um, let's talk about sentiment from the folks that you've been talking- I imagine you've been meeting with partners and also meeting with customers. What's the, what's the service provider sentiment right now, uh, in air?

Karl Francisco: Yeah, I think overall, I think a lot of people are somewhat concerned with overall capacity being available, especially in the hot markets. I consider the hot markets today being out of, uh, Asia-Pacific to the United States. Uh, for a couple reasons. Number one, as we all know, the investment in hyperscalers, AI, is going strong, and we're not seeing a slowdown whatsoever in that industry. As these companies continue to scale and try to get their products, uh, where it needs to, it's quite busy right now. And a lot of what they ship, the hyperscalers, they require freighter service or main deck capacity, and there's just not an unlimited amount of them in the marketplace. So it is a little bit tight in terms of capacity, but overall, that industry is booming like crazy, and we're not seeing a slowdown whatsoever. We're not seeing a slowdown.

And then the second industry right now is e-com. As we all know, the Chinese e-com platforms You know, they pulled their volume back back in '25, uh, when the, uh, US administration had a restriction on de minimis entries. Right. But I, I can tell you the, uh, the volume is back now. It's back. Yeah. So it's back to about, I would say, 85 to 90%, uh, pre-restriction of de minimis in the US, and that industry too is also consuming a lot of capacity into the US market from Asia. When you think about how consumers purchase goods today, e-com is a big part of everyone's life today. It's not going to go away, it's safe to say. It's only going to continue to grow in every part of the world. One, one thing about the, the e-com platforms coming out of China, Hong Kong, uh, the goalpost was moved, right? So they quickly pivoted and learned rather quickly on how to, you know, uh, change, uh, their way of doing business in the US. Sure. And they did that successfully. They were able to meet all of the, uh, the requirements that the administration requires as far as being compliant. Customs formal entries are being filed.

And like I said, they've done a good job, you know, adjusting and making the necessary changes to be in compliance with the US laws. Can't say the same, however, for China, Hong Kong going to Europe. Uh, as, as we all know, the, the laws change in Europe for de minimis entries where they impose a tariff now at the line item level. Um, and that's causing some friction in that, that trade lane today coming out of China, Hong Kong to Europe. The volume, uh, dropped by as much as, I think, 65 to 70% uh, pre-July. Uh, that volume has not returned, but there's a good chance that they will figure that out long term. And you know, it might take a while, but we, we anticipate the volume possibly getting back to what, what it used to be before the new laws went to effect in July of this year.

Chris Parker: Okay. That return from the volume from, uh, Asia to US, was that... I mean, do you feel like that was faster than anticipated? Um, and, and could Asia to Europe-

Karl Francisco: Yeah, I th- I th- I think the, the reasons why they change are different. In the US, uh, de minimis was no longer required, and you needed to file custom formal entries on every single one of those entries. So it wasn't a duty issue. Well, I guess it could be a duty issue because now they're paying duty on every item, but the value is so low I don't think it, it makes much of a difference. Whereas in Europe, it's purely a duty issue at the tariff level, and then there is a new ruling that's coming out within a few days, I think, in November where, uh, they'll be imposing another fee for shipments going into the EU, uh, an administration fees that could be somewhat costly to the uh, you know, to the platforms and also to the buyers.

Chris Parker: For sure. Um, let's switch over to customer sentiment, right? You know, you've been out on the road for six weeks. What are customers worried about right now? What's on their minds?

Karl Francisco: I think the customers right now, you know, they're focused on Q4 right now. Yeah. Typically this time of year, you know, we all talk about peak season. Are we gonna have a peak? It's hard to say whether we're gonna have a peak or not. I think we're in peak every month of the year, to be honest with you. So I, I don't know how much more peak we could get. Yes. But yeah, I do believe that the demand will be strong. All the signals are there with the hyperscalers. They're not slowing down with e-com.

Typically in Q4 they're busy because of the holiday season. Capacity on the other hand, it's not growing at all. If you look at the, the, the numbers in September, you know, the global demand grew anywhere from 8.5 to 10% in terms of demand. While capacity only grew 2.8 to 3.5%. So you can see the inbalance of the demand versus capacity there. That's causing some friction in terms of space, which is one of the major reasons why rates are elevated right now and will be con- will be, continue to be elevated in Q4. Once again, we're not seeing that slow- slowing down at all in Q4. I think it's gonna be somewhat, somewhat strong in Q4, like we saw in Q3. That's just my, my best wild guess.

Chris Parker: What's the backlog on capacity right now that you, that you know of? I mean, if planes, there's not enough planes coming out,

Karl Francisco: Yeah. Yeah, I would say that the biggest challenge is, you know, the two airline manufacturers are doing the best they can to get, you know, the planes, uh, you know, out to customers. But there is a huge backlog, and the number one reason is because of supply chain issues. You know, just trying to get the, the right parts to complete the, uh, production of the aircraft. Uh, but everyone's waiting, uh, in great anticipation. It's coming out slower than customers would like, uh, and that's one of the reasons why, you know, uh, people are struggling right now in terms of finding that capacity in the marketplace.

Chris Parker: So then going into, I mean, peak season for this month, uh- or for the rest of the year, uh, and I know that we have, uh, Chinese New Year coming up, and I know that's maybe that's more of an ocean thing, um, or impacts ocean more. Um, but what should, what kind of conversations should, um, folks out there be having with their internal teams to-

Karl Francisco: That, that's a great question. We all know that the volume was, will be somewhat strong all the way up to the Lunar New Year. Uh, next year it'll be strong up until then, maybe about a week before, then it'll s- it'll die down a bit in the air. And then right after that it'll be rather slow for maybe 10 days. Uh, but leading up to Lunar New Year, we anticipate the market being rather busy and strong. Uh, once again, with the hyperscaler industry, we're not seeing that slow down at all. Uh, that could run well into the first half of 2027. Right?

So I think what we're experiencing right now, what we experienced in Q3, what we're experiencing in Q4, my best guess is going to be more of the same for the first half of this year, unless something changes in the industry. But we're not seeing any slowdown whatsoever on that. And for customers, what's the best thing they can do? Speak with their service providers. Work with their partners. Let them know, you know, what you anticipate in terms of shipping, forecasting. That's more important than ever. And I know they heard so many times from their freight forwarders and logistic providers, forecast, forecast, forecast. I can't stress enough, especially out of Asia Pacific to the US, which is the hottest market in the world, please share the numbers with your providers so that they can plan, plan way in advance for, for space protection, okay?

Uh, the second hot market would be, I would say India into the US is heated up also. Right? So it was a strong Q3. I think Q4 we're gonna expect to see more of the same, and that's a market that's ready to take off, in my opinion. India, uh, subcon region to the US.

Chris Parker: Um, is it more hyperscale activity coming out of India or-

Karl Francisco: A lot of technology making the shift, you know, from Asia, North Asia to places like Southeast Asia and also to India. So a lot of shifting in production. And then a lot of that pro- that production now that's taking place in India, a lot of it isn't only going to the US or Europe, it's also going back to Asia.

Chris Parker: I know there's a lot of, lot of growth in Southeast Asia.

Karl Francisco: Yeah. And then, and finally, the, you know, the third busiest market in the world, I would say is intra-Asia. Mm-hmm. All, all due to, all due to AI again and hyperscalers. So a lot of movement of cargo.

Chris Parker: All right. Well, Karl "Forecast" Francisco- ... uh, appreciate the time.

Karl Francisco: Well, it's good to be back, Chris. Yeah. I'll be here for, uh, four days, and then I'll be traveling again for a week, then hopefully I'll catch you, uh, in a couple weeks again with another update.

Chris Parker: Yeah. Get some sleep. Take care.

Karl Francisco: All right. Thank you, Chris.  

You are now at our current position. Links to everything we covered today, plus some extra articles of interest are in the show notes.

And while you're there, check out the events and webinars we flagged for the weeks ahead. Thank you for listening, and we'll see you next week. 

Be sure to subscribe to your preferred podcast platform so you don't miss future episodes. To learn more about Expeditors, you can find us on LinkedIn, Facebook, Instagram, and X, or simply visit us at expeditors.com. Take care, and I'll see you next time!