Episode Transcript
[00:00:04] Speaker A: Today, where air cargo really is, how we got here, and where the smart money's going next. Joining me are two experts who know this market backwards, Tom Crabtree and Robert Van Der.
[00:00:14] Speaker B: We've been a roller coaster year. I mean, every, every month there's something new.
[00:00:18] Speaker C: There's some markets out there that are booming and there's markets out there that are just really struggling.
[00:00:22] Speaker B: Yeah, I think that's a relatively easy bet. Yeah, I would vouch for that.
[00:00:28] Speaker D: You are listening to the Freight Buyers Club. This podcast is brought to you by your host, Mike King and produced in partnership with Demerco Express Group, a global 3 PL that specializes in managing logistics to, from and within the Asia Pacific region.
[00:00:43] Speaker A: Hello one and all. This episode is brought to you by Demerco Express Group. I'm Mike King and welcome to the Freight Buyers Club. And with no further ado to my guests, first up is Robert Van Veg, CEO of Mexico based Mass Cargo Airlines. Robert's career in air freight spans klm, Atlas, airbridge, Cargo, Cargolux and a breathless ECS Group, basically a who's who of the air cargo sector. Earlier this year he took the top job at MAS where he deploys a fleet of freighters across Latin America, the U.S. europe and China. Welcome back, Robert.
[00:01:18] Speaker B: Thanks, Mike, appreciate it.
[00:01:19] Speaker A: And joining Robert is Tom Crabtree, Managing Director of Transport Research Advisory Freight consultancy based outside Seattle. Before launching TRA in 2023, he spent over 20 years of Boeing commercial airplanes and authored the Boeing World air cargo forecast. These days, he also contributes to Drury's Air Freight Insight. Tom, great to have you with us.
[00:01:42] Speaker C: Thanks for having me again, Mike.
[00:01:45] Speaker A: You're both very welcome. Let's turn to where we are now in air cargo. Tom, you're close to the data every week, particularly with your work through Drury and others.
So let's start with you. Give us the dashboard overview, what's happening right now in terms of demand, capacity and rates.
[00:02:04] Speaker C: Well, so far this year on a global scale, my air Freight's grown about 3% up through the end of July of 2025 year to date compared to the first seven months of last year. That's a substantial deceleration compared to in excess of 11% growth last year, led by two different phenomena, one being the ecom boom out of China to North America and Europe and other parts of the world. But also the big boom in the biggest, fastest growing market was actually Middle east to Europe as shippers grappled with the shutdown of the Suez Canal or the severe restriction of the Suez Canal. I should say in container ship transits.
And something like 9% of ocean capacity was withdrawn on a global scale simply because ships had to transit around the Cape of Good Hope and therefore a lot of shippers couldn't live with that. So there was a huge boom through mostly Middle east airports, particularly Dubai, transiting cargo from Jebel Ali container ship port to Dubai World Central Dubai airport.
So those two phenomena really pumped up cargo last year and the comps became very difficult this year.
So what's interesting is that with the return of the Trump administration here in the United States, there were a lot of pundits predicting that air freight would collapse. All container ship, or I should say all ecom traffic that air freight had picked up in 2023 and 2024 would defect the ocean.
None of that happened.
[00:03:33] Speaker A: And just to interject there, Tom, if you're watching us on YouTube or Spotify, you can see the Drury chart now, which shows global air freight traffic growth month to month this year. So Tom, that shows les but not really a slowing year on year trend. So how do you read that? And please continue your analysis.
[00:03:49] Speaker C: Well, it's not been the same for everybody and I think Robert will agree with me. There's some markets out there that are booming and there's markets out there that are just really struggling. But on an aggregate scale, the market is still expanded just barely 3%. Capacity has expanded about the same rate, about 3% in available cargo ton kilometers, both packed bellies as well as freighters and rates.
Compared to the ocean market, air cargo has been fairly steady Eddy. But that's not true for all markets, particularly outbound out of Asia to North America. Rates have fallen quite a bit starting in the second quarter of this year through roughly the mid third quarter of this year.
So it all depends on where you play in the market and what market you serve.
So if you look at the visual in terms of traffic, you'll see that the traffic patterns since January have been very erratic. It was very weak in January, it went negative in February, and then it rebounded in March and April.
May wasn't horrible, but June was pretty anemic. And then May bounced back to roughly five, five and a half percent growth. And anecdotally, two other industry observers pointed out preliminarily that August was somewhere between 3 and 5% growth on a global scale. Again, it all depends on where you play in the industry.
[00:05:03] Speaker A: And Robert, from the operator side, does what Tom describes line up with what you're seeing day to day in terms of yields, load factors, booking behavior, Heading into the traditional peak season, does this feel like a plateau versus this time last year or something softer?
[00:05:21] Speaker B: Well, of course you have to know that we are more of a niche player. I mean our scheduled business network is, is basically connecting, you know, North America to South America. So as Tom rightfully pointed out, I mean it really depends what kind of operator you are. If you're a global operator, you know, like, like my ex colleagues at Cargolux or, or Atlas here, what's amazing to see in this year is that if bond market goes up and another one goes, goes down almost simultaneously, these guys can adjust their network. So as Tom pointed out, China or Asia to the US has been very volatile, I would say generally relatively weak, particularly because of the de minimis abolishment.
Now at the same time, the Asia to Europe market has been very, very strong. So those operators that have the ability, meaning in terms of traffic rights and commercial grip, to shift capacity, they will see that this year is probably, you know, a reasonably good year compared to last year. For those operators that are more in a niche, you know, it can be a very different situation as far as we're concerned. Generally we've been doing okay. The biggest issue we have had is the subdued automotive sector, which has been always a strong driver of our, of our network, particularly between Mexico and Brazil. And we've seen that the automotive industry has been disproportionately hit.
At the same time we do see right now that, you know, things are starting to come back because at the end of the day, of course, you know, life goes on and production goes on. But I think a lot of companies push the brake in this specific segment. So to your question, it really depends, you know, from what perspective. I think we're probably somewhere in the middle. We're not the guys that able to equalize everything.
But we're also not the type of operator that was, you know, disproportionately hit. Of course we had to apply a lot of flexibility and agility to, you know, in our network to keep things going because yeah, we had some stressful weeks with all the ups and downs. But I would say so far, so far, so good.
[00:07:20] Speaker A: How does this compare to what you were expecting when you took the job?
[00:07:26] Speaker B: I cannot begin to analyze that really. I mean, it's been a roller coaster year. I mean every, every month there's something new. I mean, of course the terrorists have been the overarching topic, which you know, has been a moving target.
But also the geopolitical issues that, that have been playing a Part. But then again, I mean, this year may be disproportionately crazy, but as long as I've been in this business, it has been crazy. Right. So this is also the nature of air freight because that's air freight is serving that role, right. To, to basically equalize the, the supply chain problems in the world. So actually, bizarrely, all these disruptions are actually benefiting air freight. But if you're running a business like this, yeah, it's tough and this year has been disproportionately tough. But it's fun as well. You know, we thrive by that.
[00:08:17] Speaker A: Okay, there's the picture today.
A tough year. Demand is holding up. Okay? Ish. Depends on the sector rates under pressure, but not as bad as some predicted.
Some capacity move around. We're going to look at all of that in a moment. But let's first look at how we we got here.
Tom, let's walk through what we've seen in 2025, 2024. Had we had this big E Commerce surge, then we had the Red Sea diversions. That's all all fed through into this year. Plus then we've had these policy shocks at the White House on tariffs, on de minimis. We've had a lot of trade rerouting. What are the two or three levers that really shaped the this market this year?
[00:09:00] Speaker C: I would say, Mike, it's the agility of the air cargo industry, particularly the freighter aircraft industry, to pivot as necessary to put capacity in place where demand is actually stronger. And as a consequence, we've seen, like with the US Trade policy, for example, this year changing on a regular basis, a lot of large widebody freighter operators are redeploying capacity on those trade lanes where demand is strong.
So China, not surprisingly, is refocusing a lot of its export efforts on those markets that are more reliable than the United States. So one of the strongest market year to date so far in 2025 is far east Asia to and from Europe.
And then you also have in there intra Far East Asia and a couple of others in terms of the transit markets through the Middle East.
So it kind of goes back to, if I may add or throw in here. Earlier this year, the late Fred Smith, founder and former CEO of FedEx, was saying that he wasn't terribly concerned about the trade war simply because trade finds a way. It's like water in a river. It hits a rock, it goes around.
Traders will keep trading.
So in terms of capacity, you know, large widebody freighters are a big part of it. As well as medium widebody freighters, particularly like those that are. Robert operates a 330 freighters. I think you're all conversions. Correct, Robert.
So correct. That's it's a big deal being able to be flexible. What I will say what is another lever. There's a tough one. I would say that Pax Belly capacity, a lot of folks rely on that simply because it could often be priced lower than freighter capacity. But in aggregate and all things equal out, in my opinion, if you look at it longer term.
And the other thing is, is that freighter capacity is always prioritized for shipper needs. Pax Belly capacity is not. So Pax Belly capacity at an aggregate level is fully restored, but because of geopolitical tensions. No, it's not. If you look at the big freight markets where it's needed, particularly outbound Asia to and from North America and outbound Asia to and from Europe because of the closure of Russian airspace to a lot of carriers since the onset of the Russia Ukraine war.
So there's a heightened need for freighters in those two big air, the two largest air cargo markets in the world, outbound Asia to North America and outbound Asia to Europe.
[00:11:24] Speaker A: And is this what we're seeing in freight markets, Tom? Are we seeing that cargo is firing away and operators are following it, that the capacity is moving around efficiently and that's what stopped this cratering of air cargo rates that some people were predicting?
[00:11:41] Speaker C: Yes, and I would also say volatility in container ship markets is benefiting air freight. You know, the, the resting thing is, is that with the onset of Trump tariffs in early May 2025, there was a huge spike in container ship rates. Okay. There were a lot of sailing and there were blankings of strings and container ship sailings. So if you're a shipper and you have to pivot, who are you going to call? You're going to call people like Robert to take care of you. You have to.
So I'm going to point out that more than likely the past will repeat itself in the near term future later in this podcast.
[00:12:15] Speaker A: Yeah, I mean the, the, the difference between the shipping market and air cargo rates is very pronounced in terms of ones being like a roller coaster. The other one's way, way more steady. And who'd have thought that it was air cargo that was, that was steady? For anyone listening, please check out the next Freight Buyers club because we've got Lars Jensen, shipping's best analyst on. He's joined by Nils Roche, who's, well, very recently left a major carrier and he's going to share all of his insights from that position with us. So that'll be available next week. Robert, I think Tom might have answered a little bit of. The next question I was going to ask you is about you predicted, well, you were explaining last time we spoke on the Freight Buyers Club that the wide body freighter market was tight with conversion delays, lack of fresh capacity. Some of the things Tom mentioned in the market. This is playing out okay for you then?
[00:13:07] Speaker B: Well, it's, it has two sides.
It's okay in a sense that it, it holds the supply demand ratio steady which as such is in general a good thing for, for us. On the other hand, it's, it prevents us to grow efficiently. Right. So that, that's, those are the two sides of the coin. So I would still prefer that there is a bit more capacity opening up because as far as mass is concerned we need to grow our fleet. It's very important.
It's all to do with economies of scale and building the network.
Keep in mind there's inflation around us so unit costs are going up and of course we have to follow the yields but the yields are largely driven by factors outside our control.
So the way that we can control this ourselves is to grow and to kill this unit cost increase by doing that.
It's got two sides, Mike. It's got a pleasant like everything in life, it's got a good side and a bad side. I prefer to be, I prefer it to be opening up a bit, to be honest.
[00:14:04] Speaker A: Can you just give us a little bit of an insight into how you've been deploying your capacity this year in relationship to some of these changes we've seen in, in the market? Where have you been looking for opportunities and has your cargo mix shifted substantially this year?
[00:14:19] Speaker B: Well, I think you can say two things about this. First of all, we, with our clients in China, we've been working very closely on opening up the network beyond Mexico itself. Let's say up to, you know, early this year there was so much Mexico e Commerce that our Chinese customers were fine to, to just use Mexico's final destination with all the changes. First of all, US operators expanding their capacity into Mexico because of the issues with the U.S. secondly, Mexico has been imposing their own tariffs so people are complaining about the US government but many other governments are doing similar, similar things or at least contemplating them.
We have opened up capacity beyond nlu so our, our Chinese customers are now also loading with us much more to places like, like Bogota or Brazil or Chile. Second thing, we've Done. Because of the automotive weakness, we've been opening up secondary stops on our southbound network.
So instead of just flying to Brazil, we, we add a, a chili stop. Instead of just flying to, to Quito, we add a San Jose stop. We added Panama stop. So it's basically dealing with this weakness. So you're basically adding costs to an operation, but clearly you add more revenues by doing that. So these are two main things that we have done to deal with the situation.
[00:15:36] Speaker A: Okay, well, thanks for that, Robert, on those opportunities. Let's just have a little peek forward.
How do you see peak season this year? Have you got high expectations for mass? What's your take on your key markets that you've just been outlining there?
[00:15:54] Speaker B: Well, as Tom pointed out, I mean, life always goes on. So particularly the automotive market, which is important for us. We do expect that we're going to see a rebound. Actually, we see already the first signs of that because, you know, manufacturers can slam the brakes for a while, but the consumer doesn't care. In the end, the consumer goes on and demand will catch up. So our peak season is mostly set because our operation to China is based on charter operations. So we're not going to benefit from any upside, nor are we going to, you know, be hurt by any downside.
Our biggest upside lies in our scheduled business network. It's particularly between, let's say North America, Mexico and South America. And the key driver here will be the automotive segment. I'm optimistic. I think we're going to see a surge. We see the first signals.
Secondly, the flower market, our northbound market is still very resilient. And also there we are optimistic.
So, you know, the consumer goes on, keeps buying. And a period of negativism on the consumer side is always followed again by, you know, by, by, by research. Because the surge, because again, life goes on. So we think we're going to see the good side of the relatively weak summer in our markets this winter.
[00:17:09] Speaker A: Tom, what's your view on the prospects for A, A Q4 peak season, which for those who aren't familiar with air cargo is when we normally see the, the traditional air cargo peak season to build up into the, the, the holiday period.
How does that look globally in your view? And is it a different picture in the US Due to tariffs and other factors?
[00:17:30] Speaker C: Loaded question, Mike, but here goes. Okay, so Robert, cut me off if I'm wrong, but peak season, traditional peak season for the big world air cargo industry starts roughly about now through mid late November. Correct.
And for international movements. Correct.
So here's the Deal. Air cargo is a niche industry both within air transport and both within freight transport as well as free transport. And I want to emphasize to our viewers that particularly those who play in the air cargo industry, we are very small compared to the ocean markets, especially the container ship industry.
And that industry in terms of pricing power is now struggling and that's going to provoke a reaction. So for example, in May, rates spiked somewhere, I want to say 3, $4,000 per 40 foot box, what is that a 12 meter long box for those of you thinking metric. So here's the deal. Those rates have been sinking over the summer. The container ship industry wants to make a profit. They actually have a lot of pricing power because they have a much stronger sense of, how should I say, signaling one another to raise prices. So they're going to start cutting capacity because prices have fallen below $2,000 per 40 foot, 40 foot box on a global scale.
They want to make more money. They're going to start canceling services. When that happens, shippers are going to run out of options. And as a result, air freight will benefit when things start to pick up probably in the next, I would say two to two to four weeks. So air freight will probably have a peak season, may not be the biggest one that like they've ever seen or probably not be as strong as 2024, but it will be a peak season and I think it would be a bit late. That's my prediction.
[00:19:12] Speaker A: So Tom, but some people, they say when air cargo, when ocean freight rates are high, that that benefits their cargo because the price differential between the modes narrows. But you're saying in this peak season you think it'll be even though ocean prices have fallen, the air cargo will still benefit anyway. Well, so just because of the cancellation is ruptured and the time, yeah, it's.
[00:19:35] Speaker C: Going to pivot to service. That's the problem for shippers from their perspective and we at Drury, we focus on that pretty much as kind of looking at it from a shipper's perspective.
And if ocean carriers decide they're not making much money to raise prices, they reduce capacity in basic Kinsey and economics. Right. So that's probably going to happen this peak season. And as a consequence, when service starts to falter on the ocean side, I mean there is a number of folks who track reliability in ocean markets and recent numbers show that reliability numbers are faltering mid-2025.
And shippers buy air freight not only for speed but for liability.
That's the value sell of air freight.
[00:20:22] Speaker A: And on the end of the de minimis exemptions that we're thinking is going to affect the E commerce sector quite heavily, especially into the US because the de minimum exemptions were originally against China and Hong Kong ended and now that's been extended to everybody. But we haven't seen that in the rates. If you're watching on YouTube or Spotify, you'll see here China, US lane rates have stayed surprisingly steady. So will the end of de minimis, will that kick in and will those rates start showing that do you think.
[00:20:50] Speaker C: Or not pertaining to E commerce? I would say what I'm hearing is that there are again it goes back, I'm hearing rumors that and people are kind of tight lipped about it. I'm hearing just kind of like vague descriptions of what they're doing. But they're repackaging and doing different forms of consolidation to meet the letter of the law in terms of U.S. importation requirements.
Again it, it goes back to what Fred Smith of FedEx said. Trade finds a way, you know, if there's a block, block people put up a roadblock of some kind.
Trade finds a way around it, eventually it happens.
[00:21:26] Speaker A: So the solution is tariff workarounds.
[00:21:29] Speaker C: Yes.
[00:21:31] Speaker A: Adverts from team saying we are now available in the uk So I presume that they've, they've shipped a load of stuff to warehouses in the US as well and by ocean and they're going to start with different distribution patterns do you think or not?
[00:21:44] Speaker C: Absolutely, we're seeing that right now. We're seeing that right now in terms of basically the Transpac market being as weak as it has. What's interesting is that, you know the, the air freight Transpac market in May with the onset of the new Trump tariffs and the end of de minimis with respect to China and Hong Kong, which is the biggest origin of de minimis traffic coming into the United States, it fell like 10, 11% and then the contraction continued in June but it was only down about 4 and a half to 5%. Then in July it was only down 1% relative to one year prior.
So I predict that when IATA publishes their traffic statistics for August, in the coming days here in late September 2025, we're probably going to see a positive Transpac number. We'll see.
[00:22:31] Speaker A: Okay, big call, big call. Okay, how about other origins, Tom?
Are we seeing Chinese exports being rerouted? You've sort of touched on some of this. But what's going on in India, Vietnam? How about Taiwan into the us North Asia into Europe? Latam Latin American into Europe? Where's exciting right now?
[00:22:51] Speaker C: Well, Vietnam is obviously a focus of Chinese foreign direct investment.
So that's a big booming market since the onset of all this uncertainty over this year. But I'll give you an anecdote that goes back to the first Trump administration back in 2018 with the onset of the, the first Trump administration tariffs. When I was still working at Boeing and we were sitting now looking at US Trade data and released by the US Government, we noticed that Canada became a big air cargo exporter of the United states in the second half of 2018.
Now was the Canadian dollar weak?
No, not as weak as it could have been.
So yes, workarounds are, they're out there, they do happen.
You know, Canada is a nice place, but it's not a big booming air cargo market. Export market.
[00:23:39] Speaker A: Robert, what's your take on the most exciting origins? Or perhaps you can come in on the US end in de minimis exemptions with your view on how this is impacting global freight? Take your pick.
[00:23:51] Speaker B: Well, I think first of all on your earlier question also on the Transpac market, what happened there?
Actually some people have been complaining, some operators have been complaining about the fact that, you know, US Operators got all these great traffic rights, right? So in general the US Operators have a big advantage, you know, where they can fly. But this year we saw the, the definite upside of that because if all this capacity between, you know, of atlassair, of, of Kalita national would have been restrained to the Transpac market only, I think we would have seen a bit of a bloodbath over the summer on the yields. But because they could redeploy the capacity to Asia Europe markets because they have this ability to do that.
Actually the, the net effect was, was rather limited on yields and I think it's a big tribute to the air cargo sector, you know, on the, on the flexibility on all the people in those companies, how and, and, and how they can manage that. I mean it's simply amazing because this was such a big external shock. If low value E Commerce drops by 40% almost from 1 day to the next and the industry is able to deal with that this way. I think it's really, really impressive.
On the other question, I think Vietnam is the big thing right now. So Vietnam and Southeast Asia in the early 90s, you know, it was all about Malaysia, Singapore and Thailand, you know, where all the high tech and all the stuff was coming from. It all got relocated to China. I think we're currently seeing a reversal. So I put my bets on the Southeast Asian market for next year, for this year already, but particularly for next year. And I think they will really benefit, particularly Vietnam because they're still not pointed out its proximity to, to China. One thing that we didn't talk about yet is, is a new factor. Right. And we talk about sea and, and air.
How about rail? So real has been a big growing part of, of the capacity between Asia and Europe.
Why I mentioned this is that since, since two weeks there's been, you know, geopolitical issues on the border between Poland and, and Belarusia and. Very good point.
[00:25:49] Speaker A: Yeah.
[00:25:49] Speaker B: This is the next, this is the next thing. So this, this route is being closed and this will be another bullish factor for the peak season between.
Well, between Asia and Europe. But of course once capacity is sucked into that market, it will have a repercussion on the other markets.
[00:26:08] Speaker A: This is the closure of the Belarusian Poland border. Yeah.
Because of problems with NATO and Russia.
How does your analysis of that, Robert, how's that feeding back into the decisions you're making for math?
[00:26:21] Speaker B: Well, you know what we are doing is we're really opening our sales network in Southeast Asia. I mean traditionally we had our Internet partners mostly in North Asia.
Currently we're pushing hard to open up our sales channels in Southeast Asia so that we can, even though we're not flying there ourselves, we can benefit by people interlining through LA or Mexico. So this is the part we can directly influence.
[00:26:46] Speaker A: Can you just give us some insight into. Let's call it. I think I called it last time you were on the Diary of an Air cargo CEO with that. How do you make decisions when you've got so much fog?
So fog being tariffs, compliance, I don't know, currency, fuel pricing. But when there's a big change, what's your say, your 48 hour playbook. How do you go about pivoting capacity based on things, I mean, or changing your pricing? What's, can you explain how that process works?
[00:27:18] Speaker B: Well, I think it's two things. I mean it's, it's first of all data. But data of course give you, gives you only the past. But it's a good start. And then from there on it's, it's mostly intuition. I mean being connected in this business, speaking to customers and based on experience making your, your decisions, you cannot always get them right. But as long as you get them right, seven or eight out of ten you're, you're doing reasonably well.
Yeah, I mean if we would all know what would happen, you know, we wouldn't be meeting people like us. Right. So it's a lot about intuition and experience, but definitely data driven.
[00:27:53] Speaker A: We'll just take a short break. We'll be back with you in a second.
[00:27:56] Speaker D: This podcast is proudly produced in partnership with Demerco Express Group, a trusted provider of global shipping and contract logistics services in Asia, Europe and North America. DeMurco's particular strength is in Asia where it gives shippers the freight capacity and local market expertise to streamline freight movements to and from the region, particularly for Trans Pacific lanes. With 130 forwarding and logistics locations across China, India and Southeast Asia, Demurco connects Asia with the world like no other. Global3PL. You are listening to the Freight Buyers Club.
[00:28:33] Speaker A: Okay, let's have a look at what happens next. It's our lightning round. It's new on Freight Buyers Club. Tom Peak season.
So your call. Mini peak, late peak or no peak?
[00:28:45] Speaker C: Late moderate peak is my short answer. For the reasons I outlined.
The ocean market is really struggling in terms of maintaining pricing. When that happens, the big liner companies tend to restrict capacity. They blank sale, as it were, is a term in the industry to bolster pricing. When that happens, service levels falter for shippers and air freight will benefit from that probably later in the peak seasons, probably starting in October is my prediction.
I do predict that pricing, you know, air cargo pricing and aggregates come down somewhere between 3 and 5% world average general freight rates this year relative to last year. But container ship rates are double digit percentage down compared to this time last year. So as a consequence, with all the volatility you see in ocean, we're going to see, I think a moderate late peak, not as strong a peak last year for certain. That's certainly not going to happen. But I think we'll see a moderate peak this year.
[00:29:42] Speaker A: Okay. I think that that sort of circumvents my next question, which is about spot rate in the next 90 days. So how about the spot rate in the first quarter of next year? Sideways down another tick or a bounce on on key lanes?
[00:29:55] Speaker C: Well, I'm, I'm going to take the fifth on that one because the uncertainty with US Trade policy I thought would start to abate by now, but it has not done that as of September 2025. I think the uncertainty will continue to play out into 2026.
There are a number of different reads in terms of data out there.
As Robert has pointed out in this conversation, his business is very heavily dependent on the automotive sector and he's seeing some positive signs of life. And that industrial activity besides e Com and fast fashion and completed, you know, consumer electronics. The air freight industry relies heavily on industrial support mechanisms. And what has really been missing the last three, four years is the industrial market bolstering air freight. This is on a global scale, not just for, say Robert, but in Europe in particular, but also in the United States.
So here in the US we had a rate cut in terms of interest rates last week, which has sent the. The stock market's booming, but we also have a weak jobs market starting to emerge.
So taking that in stride, barring a.
[00:31:13] Speaker A: Are we saying 2026 stronger than 2025?
[00:31:16] Speaker C: Tom, it is potentially possible.
The capacity needs to be there.
[00:31:21] Speaker A: Possible.
[00:31:22] Speaker C: Boeing and Airbus need to deliver more aircraft into the aircraft system for that to happen, happen and principally when I say that passenger widebodies and their associated bellies as well as freighters.
So. And the only place to get a large widebody freighter these days is a triple seven from Boeing and now a triple seven conversion from IAI in, in Israel.
[00:31:45] Speaker A: Okay. And Robert, Robert, for you, you don't need to take the fifth on this one. Do you think Liverpool are going to win the league?
[00:31:52] Speaker B: Yeah, I think that's a relatively easy bet. Yeah, I would, I would vouch for that.
[00:31:58] Speaker A: Back on the piece.
[00:31:59] Speaker B: That's very good news though.
[00:32:00] Speaker A: Yeah. But is it, is it time? How do you view, what's your fleet plan? You know, you're still looking to expand. Is that how you're looking at 2026?
[00:32:09] Speaker B: Yeah, most definitely. I mean, as I explained, I mean we need to grow. I mean, simply because of economies of scale. This is, this is not a decision you take just by looking at tomorrow's market. This is a decision you take structurally right. In fact, in an ideal world you execute this decision when markets are weak and not when they're strong. But then again, I mean, you cannot always get this completely right. I mean, as much we need to grow, we need to bring down our unit costs and grow our network. So then it's just about how to execute that decision. So if we have an opportunity to grow next year, we will take it because, you know, there's no point to say when are we going to do it, exactly what moment in time to get it completely right, to get it completely coincide with the weak market and you have better, better buying power over, over the lessors.
So yeah, we will need to grow. We are optimistic about the market. We believe that again, after this shock of terrorists, things will settle down. There's still, you know, generally capacity shortage, geopolitical unrest. I think is likely to remain.
So. Yeah, E commerce, I mean, we spoke about the U.S. minus 40%. But what we didn't speak about is that despite that, global E commerce is still up by about 30% despite this. Right. So, you know, we're talking about growth markets. Latin America, Africa, Middle East, Europe. I mean, there's still, there's still so much push, you know, for air freight capacity.
[00:33:37] Speaker A: Latin American market still to grow next year then.
[00:33:39] Speaker B: Yeah, yeah, I would. I would definitely think so.
[00:33:42] Speaker A: And one bet you'd make on a city pair for 2026.
[00:33:48] Speaker B: Hanoi, Los Angeles.
[00:33:52] Speaker C: Hanoi, Los Angeles, Mexico.
[00:33:55] Speaker A: Gentlemen, thanks for cutting through the noise takeaways. Demand isn't falling off a cliff. Rates are telling us a few mixed messages, but so maybe plan with humility there.
Opportunity lives where you're fastest on the pivot. Big thanks to the Merco Express group for supporting the show. And if this helped you sanity check your budget, share it with a colleague and subscribe. That's it for today. Tom Crabtree and Robert Van Der we thank you very much for joining me. It's been my pleasure.
[00:34:21] Speaker B: Thanks a lot, Mike. Thanks, Tom.
[00:34:23] Speaker C: Thanks, Robert.
[00:34:23] Speaker B: Knock it up, man.
[00:34:24] Speaker C: Mike, thanks for having me. And I hope this was insightful for all your listeners.
[00:34:28] Speaker A: Thank you, Tom. Much gratitude is ever to Karen Ball and Tom Matthews for their production skill. We'll be back soon. And Mike King, thanks for listening to the Freight Buyers Club.
