The air cargo industry is poised for a year of moderated growth in 2025, as projected by the International Air Transport Association (IATA). Despite a deceleration in growth rates, the sector remains robust, driven by factors such as ocean shipping delays, constrained freighter capacity, and the continued rise of cross-border e-commerce.
Projected Growth and Market Dynamics
In 2025, IATA anticipates cargo volumes to reach 80 million tons, reflecting a 5.8% increase from the previous year. This growth, although slower compared to the double-digit surge seen in 2024, underscores the resilience of the air cargo market. Throughout 2024, cargo demand exhibited significant year-over-year growth, ranging between 10% and 13%, depending on the measurement metrics used. The third quarter’s volume trends were second only to the bustling fourth quarter of 2021, heavily influenced by the pandemic. Predictions from other market observers align closely with IATA’s forecasts. Xeneta, a freight data provider, envisions a 4% to 6% growth in air cargo demand for 2024, with capacity increases pegged between 4% to 5%. Similarly, consultancy firm Rotate anticipates growth around 4%, while logistics giant DSV posits a potentially flat growth scenario. These projections suggest that sustaining high growth rates will be challenging after the significant uptick witnessed in 2024.
Looking at the ongoing year, it is on track for a record-setting fourth quarter. Unique to this period is the lack of a discernible peak leading into the holiday season, as demand has remained consistently strong throughout the year with minimal seasonal decline. Industry analysts attribute the relatively stable pricing in a climate of high demand to proactive shipment strategies. Businesses have moved shipments well ahead of the typical crunch periods, often opting for short-term contracts guaranteeing space instead of relying on on-demand booking. This approach has helped maintain stable pricing despite the high demand, which reflects an evolving strategy within the industry that favors more predictable logistics planning.
Air Cargo Traffic and Revenue Projections
Looking ahead to 2024, IATA forecasts air cargo traffic, a combined measure of weight and distance, will grow by 11.8%, nearing its all-time high. Concurrently, IATA projects that airlines, both passenger and cargo, will generate $157 billion in cargo revenue by 2025, representing a 5.4% increase from the current year. Such revenue levels will render cargo to contribute 15.6% of total airline revenues versus 12% in 2019. Average yields across the industry are expected to stay stable, maintaining an increase of 30% above pre-pandemic levels. This optimistic outlook highlights the adaptability and resilience of the air cargo sector in the face of fluctuating market dynamics and economic pressures.
Throughout the pandemic, dedicated freighters became predominant due to the sidelining of passenger aircraft. While the ratio of freighter to belly hold traffic has normalized to 55/45 with global travel recovery, the demand for dedicated widebody freighters still surpasses capacity, exacerbated by production delays of factory-built and converted freighters. This capacity imbalance is most pronounced in the trans-Pacific trade lane, where the share of dedicated freighter capacity is remarkably high at 89%, exceeding levels witnessed at the pandemic’s peak. The limited belly capacity between the U.S. and China, strained by diplomatic tensions, has redirected lower-deck capacities away from China, prompting all-cargo airlines to allocate more resources to the Asia-Pacific region—an epicenter of e-commerce.
Capacity Imbalance and E-commerce Influence
E-commerce has emerged as a pivotal growth driver for air cargo, significantly influencing volume trends in recent years. Experts estimate that over half of Asia’s air cargo volumes this year are attributable to e-commerce activities. This surge, propelled by major online marketplaces leveraging direct-to-consumer fulfillment strategies from China, has edged out traditional freight categories such as apparel, electronics, and automotive parts. By elevating yields, e-commerce has reshaped the air cargo landscape and prompted traditional industries to adapt their logistics strategies.
The broader economic landscape is viewed favorably for air cargo. The World Trade Organization predicts merchandise trade growth of 3% in 2025, aligning with the global gross domestic product growth rate, up from 2.7% in 2024. However, potential disruptions such as proposed widespread tariffs by U.S. President-elect Donald Trump could threaten this outlook. Trade wars could prompt retaliatory tariffs, spurring inflation and dampening consumer spending. Additionally, heightened regulatory scrutiny on import security and duty-free e-commerce shipments might hinder international air shipping growth.
Airfreight demand could face further challenges if ocean shipping rates revert to pre-pandemic levels following a resolution of the Red Sea conflict or if e-commerce streamlines regulatory pressures through hybrid models, combining aerial and pre-stocked warehouse fulfillment strategies across critical markets. Conversely, the air logistics sector might see a surge in U.S. shipments should a threatened dockworker strike lead to the shutdown of East Coast and Gulf Coast ports, pushing businesses to opt for air freight to manage high-value goods and essential industrial components.
Economic and Regulatory Challenges
The International Air Transport Association (IATA) anticipates that the air cargo industry will experience moderated growth in 2025. Despite a slowdown in growth rates, the sector remains strong. Several key factors contribute to this resilience. Ocean shipping delays continue to affect global supply chains, making air cargo a more attractive option for timely deliveries. Furthermore, freighter capacity remains limited, which boosts demand for air freight services. Another significant driver is the ongoing expansion of cross-border e-commerce, which has created a steady demand for fast and reliable shipping solutions.
Air cargo’s reliability and speed offer essential advantages over other modes of transportation, especially when businesses need to move goods quickly across international borders. The industry’s adaptability in handling various types of cargo, from perishable goods to high-value items, further underscores its importance in global trade.
Moreover, advancements in technology and logistics are enhancing the efficiency and tracking of air shipments. Innovations such as real-time tracking systems and improved handling facilities are helping to streamline operations and reduce delays.
In summary, although the air cargo industry may see a tempered pace of growth in 2025, it remains a critical component of global trade. Influences like ocean shipping setbacks, limited freighter availability, and escalating cross-border e-commerce ensure the sector’s ongoing relevance and vitality.
