Air freight no longer prices a year at a time. Sixty percent of new air space deals in the third quarter ran three months or less, up from 25% a year earlier [1]. This shift breaks the safety-stock math for supply chain teams.

Fast shipping is what lets a stock buffer stay thin. Days later, the physical warehouse space to hold that buffer shrank at its fastest pace since March 2022 [2]. Both sides of the trade vanished at once.

The big picture:

The safety-stock choice has always been a simple trade-off. Planners weigh the cost of holding extra goods against the cost of buying speed when those goods run out.

For years, both prices were stable enough to drop into a spreadsheet and defend in a budget review. The first leg is the one everybody watches. Xeneta’s air freight data shows spot rates averaging $3.10 a kilogram in September, up 27% on the year [1].

Demand grew 6% while capacity grew just 2%, letting carriers charge a premium [1]. The more telling shift is in the term length, not the rate.

Three-month agreements made up 42% of new contracts, while deals longer than a year nearly vanished at 3% [1]. Shippers now ask for floating rates tied to the market rather than a fixed annual number [1].

What strikes me here is that the physical side of the trade moved against planners at the exact same time. The September Logistics Managers’ Index (LMI) — a survey where any score above 50 means growth — came in at 70.2 [2].

Inventory levels jumped 6.1 points to 58.9, and the build is running upstream [2]. Goods sitting at the wholesale tier read 61.4 against 53.8 downstream. This means most of that stock has not reached retail stores yet [2].

The storage market answered that build right away. Warehousing space fell 14.2 points to 39.3 [2]. This marks the fastest drop since supply chains froze in March 2022 [2].

Warehousing prices read 73.5, and total logistics costs hit 246.1 on a 0-to-300 scale [2]. A planner who built a safety-stock case on stable air and warehouse rates lost both inputs in the same month. Stock is piling up furthest from the buyer, just as the cheapest place to keep it gets scarce.

By the numbers

  • 60% — Short-term air deals: New air space contracts in the third quarter ran three months at most, against 25% a year earlier and 47% in the second quarter [1].
  • $3.10 a kilogram — Spot air rate: September air cargo spot rates rose 27% year on year, with demand up 6% against a 2% rise in capacity [1].
  • 39.3 — Warehousing space: The LMI storage-capacity score fell 14.2 points, the fastest drop since March 2022, while inventory costs rose to 79.9 [2].
  • 246.1 — Total logistics costs: This reading sits on a 0-to-300 scale where 150 is break-even, hitting its highest mark since April 2022 [2].

What I’d watch:

The teams closest to this are not re-running the safety-stock formula. They are deciding what they can actually commit to while both inputs float. Here is what I am watching next.

  • Contract terms over rate levels: I am watching whether buyers keep chasing a fixed annual air rate that the market stopped selling, or shift to a floating index. A one-year fixed rate simply does not fit current market rules [1][3].
  • Where the buffer sits: The inventory build is showing up upstream at the wholesale tier [2]. If storage stays tight, I expect pressure to move buffer stock to nodes with cheaper space rather than cutting total units.
  • The fuel rail: The published North American air freight fuel fee is $0.604 a pound, set from jet fuel at $3.899 a gallon, with freight fuel on diesel at $0.332 a pound [4]. That line moves with the same market the space contracts float against.
  • The inbound surge: The Port of Los Angeles expects boxed imports to jump roughly 50% to 55% year on year across late September and early October [2]. That volume has to land somewhere, and warehouse space is already heavily used at 64.3 [2].

The catch

My read is that this is a pricing problem, not a true shortage yet. The LMI is a survey of what managers expect, not a hard warehouse lease rate. A survey index above 50 can sit there for months while actual space still clears for a price.

Fast shipping can also survive a floating rate. If a team needs speed, a floating formula does what a fixed rate did, as long as both sides agree on the benchmark. The real loss is budget certainty, not the transport option itself.

The part I keep circling is that these two markets did not move together. Air space is short because demand outran supply and jet fuel doubled from its pre-conflict level [1][3]. Warehousing tightened because physical goods arrived [2].

Those are different causes with the same effect on a planner, and either could reverse on its own.

One more caution on the stock side. Business inventories were already 3.8% higher than a year earlier in July, and merchant wholesalers held $958.9 billion of it [5]. That tells us the refill started well before this window, not because of it.

At a glance

  • The Big Shift: The two prices behind every safety-stock decision stopped being fixed at the exact same time. New air space deals shifted heavily to three months or less, and warehouse space shrank at its fastest pace since March 2022 [1][2].
  • Why It Matters: Fast shipping is what lets a buffer stay thin, and the physical storage the buffer sits in is now scarce. A planning model fed a fixed annual air rate and a stable warehouse rate is budgeting against numbers the market no longer quotes.
  • What I’d Watch:
  • Contract structure: Whether buyers accept a floating index instead of a fixed annual air rate the market has stopped selling [1].
  • Buffer location: Whether stock moves to cheaper nodes rather than shrinking, now that the build sits upstream at the wholesale tier [2].
  • The inbound surge: Port of Los Angeles imports are forecast up roughly 50% to 55% year on year, straining a warehouse system already heavily used [2].
  • The Catch: The logistics index is a survey of expectations, not a fixed lease rate, and a floating formula restores flexibility even when it costs budget certainty. The two markets tightened for different reasons, so either can loosen on its own [1][2].

Related reading

Sources

[1] Xeneta, “Shippers Seek Airfreight Rates ‘Floating Mechanisms’ Before Committing to Long-Term Capacity as Demand Grows +6% Year-on-Year in September” (1 October 2026) — https://www.xeneta.com/news/shippers-seek-airfreight-rates-floating-mechanisms-before-committing-to-long-term-capacity-as-demand-grows-6-year-on-year-in-september [2] Logistics Managers’ Index, “September 2026 Logistics Manager’s Index Report — LMI at 70.2” (released 6 October 2026) — https://www.the-lmi.com/september-2026-logistics-managers-index.html [3] Supply Chain Dive, “Air freight shippers weary of long-term fixed contracts” (7 October 2026) — https://www.supplychaindive.com/news/air-freight-shippers-weary-of-long-term-fixed-contracts/832286/ [4] UPS Supply Chain Solutions, “North American Air Freight Fuel Surcharge” (effective 15 September 2026) — https://assets.ups.com/adobe/assets/urn%3Aaaid%3Aaem%3A33a68a52-a8b4-40f9-ba34-f1409a3cb25d/original/as/north-america-air-freight-fuel-surcharge [5] U.S. Census Bureau, “Manufacturing and Trade Inventories and Sales: July 2026” (released 16 September 2026) — https://www.census.gov/mtis/current/index.html