Air cargo market steadies despite trade uncertainties
Global air cargo demand showed resilience in January, with only a slight decline despite ongoing trade tensions and new tariff concerns.
While trade policies can impact long-term strategies, analysts suggest they have yet to cause major shifts in airfreight volumes. Instead, seasonal factors, particularly the earlier Lunar New Year, contributed to the modest 2% drop in demand.
Despite this temporary slowdown, industry experts maintain their projections of 4-6% growth for global air cargo in 2025, citing strong demand for international shipments. While new US tariffs and retaliatory measures from trading partners have introduced uncertainty, market fundamentals remain stable, and trade negotiations are expected to shape future policies rather than cause immediate disruption.
eCommerce remains a key growth driver
Since late 2023, cross-border eCommerce has been a major force driving airfreight demand. Policy changes, such as the potential removal of the de minimis exemption, could introduce operational challenges, particularly by increasing customs requirements and processing times. However, industry leaders believe the sector will adapt, as many eCommerce platforms have prepared contingency plans for these regulatory shifts.
Even if compliance costs rise, eCommerce goods are expected to remain competitively priced compared to domestic retail options. While customs-related delays could impact consumer sentiment, alternative shipping strategies will likely emerge to maintain strong demand and minimise disruptions.
Air cargo rates remain elevated
Despite modest demand growth, global air cargo rates in January remained well above pre-pandemic levels. Spot rates were 17% higher than the previous year, driven by sustained eCommerce shipments, aircraft production constraints, and airspace disruptions affecting global trade routes.
Rate fluctuations varied across key trade corridors. The Middle East and Central Asia to Europe route recorded the highest increase, with spot rates surging by over 60% due to Red Sea shipping disruptions. Europe to North America also saw double-digit increases, reflecting steady demand. Meanwhile, backhaul trade routes, such as North America to North East Asia, saw significant rate declines due to shifting trade balances. The Europe to Latin America corridor remained stable, with moderate year-over-year growth.
Capacity shifts towards Asia
Freighter capacity continues to be realigned, with an increasing focus on Asia-related trade lanes. While general airfreight demand has shown little sustained growth in recent years, shifting capacity allocations could benefit shippers in other regions by exerting downward pressure on rates.
Looking ahead, the full impact of regulatory changes, particularly those affecting cross-border eCommerce, will take time to materialise. However, the broader air cargo market remains unpredictable, requiring shippers to maintain flexibility and adaptability in their logistics strategies.
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