Air cargo growth will slow in 2025

Air cargo growth is expected to halve in 2025, but the year is still expected to be positive for airlines due to ongoing ocean delays, tight freighter capacity and strong cross-border e-commerce activity, the International Air Transport Association has forecast. International Air Transport Association). According to the International Air Transport Association, cargo traffic is expected to reach 80 million tons, an increase of 5.8% from 2024.

Also read: US air traffic controller shortage hampers aviation and air cargo growth

The International Air Transport Association (IATA) reports that air cargo demand has increased by 10% to 13% year-on-year this year, depending on whether it is measured in terms of volume or tonnage transported. The surge was largely driven during the pandemic, generating deal volume that nearly approached the fourth-quarter 2021 record.

Cargo data provider Xeneta predicts air cargo demand will grow 4% to 6% next year, while consulting firm Rotate expects growth of about 4%, according to IATA’s outlook. At the same time, logistics giant DSV predicts that air cargo growth will enter a plateau period.

Market dynamics and revenue insights

Despite strong demand, the current market stability is the result of companies proactively shifting shipments and securing space through short-term contracts. IATA expects air cargo volumes to grow by 11.8% in 2024, near all-time highs, and this dynamic will be maintained in 2025, when cargo revenue will reach $157 billion, accounting for 15.6% of total airline revenue, compared with 12% in 2019 Big jump.

E-commerce has significantly driven air cargo growth in Asia recently, accounting for more than 50% of cargo traffic, while the traditional B2B market is likely to rebound next year, driven by demand for semiconductors from artificial intelligence and electric vehicles. Global average yields in October were significantly higher than 2019 levels, reinforcing IATA’s modest forecasts of a -3.5% decline in yields in 2024 and stabilization in 2025.

Challenges and Opportunities

The industry faces several challenges, such as potential customs regulatory changes and geopolitical tensions. However, the expected recovery in the traditional air freight market – coupled with logistical adjustments such as transshipment options in the Middle East and Europe – points to continued adaptability within the industry.

Expected economic developments, such as possible U.S. tariff escalation and changes in the regulatory landscape following the return of President Donald Trump, could impact the growth trajectory. However, potential labor disputes affecting U.S. coastal ports could spur an increase in air traffic, boosting the industry.

Economic Outlook and Strategic Priorities

Total aviation industry revenue is expected to exceed $1 trillion next year, reflecting a promising financial trajectory supported by cheaper jet fuel (expected to average $87 per barrel) and improved operating efficiencies. However, supply chain issues for aircraft and engine manufacturers remain a limiting factor.

Labor costs will rise as productivity improves, but unit labor costs remain stable and the airline industry faces tight margins. IATA Director General Willie Walsh stressed the need for relentless cost management and efficiency as airlines deal with post-pandemic growth and infrastructure challenges.

Source: IndexBox Market Intelligence Platform