In a striking turn of events that challenges conventional market logic, the global air cargo industry is currently experiencing a significant surge in shipment volumes even as freight rates continue their downward trajectory. This unusual dynamic paints a complex picture of a sector grappling with intense competition and shifting economic headwinds, forcing stakeholders to reconsider traditional metrics of success. While the skies are busy, the path to profitability remains clouded with uncertainty.
A Snapshot of a Contradictory Market
The global air cargo sector is currently navigating a period of intense activity, serving as a critical artery for the pre-holiday supply chain. As goods move across continents to meet consumer demand, the industry finds itself at a peculiar crossroads. The air is thick with the hum of logistics in motion, yet the economic signals are sending mixed messages, creating a complex and challenging environment for all participants.
At the heart of this complexity lies a fundamental paradox: shipment volumes are on the rise, while the rates charged for freight are simultaneously falling. This dynamic has locked key market players—carriers, shippers, and freight forwarders—in an increasingly competitive landscape. Each group is forced to adjust its strategy in a market where increased business does not necessarily translate to increased revenue, a situation exacerbated by shifting consumer behaviors.
A major factor shaping these dynamics has been the explosive growth of e-commerce, which for years served as the industry’s primary engine. However, a recent and notable slowdown in this sector is now adding another layer of uncertainty. The once-reliable boom has given way to questions about future growth drivers, forcing the industry to re-evaluate its long-term outlook and dependencies.
Unpacking the Numbers Growth Amidst Pressure
The Unexpected Volume Boom
Defying a previously flat outlook, air cargo demand experienced an unexpected 5% year-over-year surge. This growth was not fueled by a sudden economic turnaround but rather by shippers adhering to traditional annual shipment cycles. Many businesses proceeded with their logistics plans as usual, creating a robust flow of goods that outpaced muted industry forecasts.
A clearer understanding of the U.S. tariff situation has also contributed to this stability. With trade levies settling in a manageable range, shippers have gained the confidence to maintain consistent cargo flows without the fear of crippling cost escalations. Moreover, short-term volume spikes have been closely linked to major consumer events, such as Black Friday promotions, which concentrate significant demand into narrow windows and temporarily boost shipment activity on key trade lanes.
The Persistent Rate Decline
Despite the healthy demand, air cargo spot rates have failed to reflect this strength, falling 5% year-over-year to an average of $2.73 per kilogram. This decline underscores a fundamental imbalance in the market, where available capacity continues to match or exceed the volume of goods needing to be shipped. The dynamic global load factor, a key measure of how full cargo holds are, remained flat compared to the previous year, indicating that the supply of space is effectively neutralizing the impact of rising demand.
Looking ahead, forecasts for 2026 suggest a continuation of this trend, with modest demand growth of only 2-3% expected. Critically, supply is projected to outpace this growth, ensuring that downward pressure on rates will remain a defining feature of the market. This environment points toward a prolonged period of intense price competition among carriers.
Regional rate performance reveals a more nuanced story. The Southeast Asia to North America lane witnessed a steep 15% year-over-year decline, largely attributed to increased carrier capacity and softer e-commerce volumes. In contrast, the Northeast Asia to North America lane saw a more modest 5% drop, cushioned by a significant month-over-month gain driven by promotional holiday shipments.
Navigating Turbulent Skies Key Industry Hurdles
The most significant headwind facing the industry is the sudden stall in China’s cross-border e-commerce growth. After an unprecedented 27 consecutive months of expansion, this powerful engine of air cargo demand has unexpectedly sputtered. The abrupt halt raises serious questions about the sustainability of future growth and whether another driver can emerge to fill the void.
This external challenge is compounded by intense internal competition among carriers. In a bid to secure volume and maintain market share, airlines are engaging in aggressive pricing strategies. This race to the bottom directly squeezes profit margins, creating a scenario where carriers are working harder to move more goods for less revenue, undermining financial stability even when aircraft are flying at high capacity.
A looming future risk is the currently low level of inventory stocks held by businesses. While this has muted some of the immediate demand, the eventual need for replenishment in 2026 could create a new set of challenges. When that replenishment cycle begins, the impact of existing U.S. tariffs may become far more pronounced, as the cost of restocking entire supply chains will magnify the financial burden on shippers.
The Regulatory Compass Tariffs and Trade Dynamics
The regulatory landscape, particularly U.S. tariff policy, remains a crucial factor influencing trade flows and market sentiment. For much of the past year, the industry operated under the shadow of potential high-stakes levies, which created significant uncertainty for shippers planning their long-term logistics strategies.
However, initial fears of severe levies in the 30% to 100% range have given way to a more manageable reality, with actual tariffs holding in the low teens. This de-escalation has had a mitigating effect on consumer demand, as the passed-on costs have been less disruptive than once feared. Consequently, shippers have been able to maintain more predictable shipping patterns.
In response, many shippers have adopted a strategy of compliance by absorbing these tariff costs directly rather than passing them on to consumers. While this approach has successfully shielded the end market from immediate price shocks and stabilized demand, it places sustained financial pressure on the shippers themselves, testing their long-term resilience in a competitive market.
Charting the Course for 2026 and Beyond
The industry’s trajectory for the coming year is defined by forecasts of modest, single-digit growth. This marks a significant departure from the volatile peaks and troughs of recent years, suggesting a market that is settling into a pattern of slower, more incremental expansion. Stakeholders must now adjust their expectations and strategies for a period of sustained but unspectacular growth.
The primary market disruptor will continue to be the imbalance between supply and demand. With aircraft capacity growth set to outpace the 2-3% rise in demand, carriers will have little room to increase rates. This fundamental dynamic ensures that the market will remain highly competitive, with pricing power continuing its shift away from airlines.
This environment will likely force a strategic pivot for freight forwarders, who are expected to prioritize gaining market share over maintaining strict price discipline. As they compete for volume, forwarders will contribute to the ongoing transfer of pricing power from carriers to shippers, solidifying a market that favors those buying cargo space over those selling it.
Final Approach Synthesizing the Markets Mixed Signals
The global air cargo industry currently exists in a state of paradox, characterized by the contradictory trends of healthy demand and eroding financial yields. The surge in shipment volumes, while a positive indicator of economic activity, does not translate directly to profitability in a market saturated with capacity. This disconnect defines the central challenge for carriers and forwarders alike.
This creates a demanding environment where success is measured not just by volume but by the ability to navigate intense price pressure and maintain margins. The traditional logic that full planes equal a healthy industry is being tested, forcing a re-evaluation of what constitutes a strong market performance.
Moving forward, key areas to watch include the sustainability of the e-commerce engine and its potential for recovery. Equally important will be the strategic responses of carriers and forwarders; whether they continue to prioritize market share at the expense of rates or find new ways to create value will shape the industry’s direction for 2026 and beyond.
