Prominent industry stakeholders are cautioning that the 2025 growth rate in air cargo volumes could be cut by half, or more, from this year’s elevated levels.
Expectations for air cargo heading into 2024 were for 1% to 2% growth. After 12 consecutive months of double-digit gains and elevated yields, many air logistics professionals are looking for the good times to continue rolling.
But in a quarterly analysis issued Monday, Denmark-based logistics giant DSV said it expects air cargo volumes to be flat in 2025 compared to this year as businesses fully adapt to ocean supply chain disruptions that pushed more freight to air and cross-border e-commerce tapers off. If the prediction pans out, it would mark a significant change from the 11% year-over-year air traffic growth so far in 2024.
DSV projected the surge in e-commerce demand from Chinese marketplaces will slow because many markets are saturated with sellers and governments like the United States are preparing stricter customs regulations for low-value shipments that skirt import duties and compliance requirements.
Tightening eligibility of Chinese parcel shipments that currently qualify for duty-free status could reduce airfreight volumes to some degree next year and beyond, but Chinese sellers like Temu, Shein and AliExpress are already adjusting their fulfillment models to ship frequently ordered products by ocean and distribute them from U.S. warehouses.
Freight analytics firm Xeneta is forecasting air cargo demand will grow 4% to 6% next year, depending on the trade lane, while capacity increases in the 4% to 5% range.
Volatile geopolitical factors and widespread tariffs threatened by President-elect Donald Trump could create headwinds for air cargo in 2025. In the short term, businesses are expected to rush imports before Trump takes office and can implement tariffs early next year. Economists say the higher price of goods could decrease demand. Anticipated U.S. reforms of customs rules governing easy access to low-value parcel shipments could cause a drag on e-commerce flows from China as import fees go up. And China’s gross domestic product will fall to 4.6% in 2025, S&P Global estimates.
Has growth peaked?
Air logistics executives previously anticipated a muted peak season because demand was already elevated by diversions from unreliable ocean shipping, businesses frontloading orders to minimize potential shipping delays and the constant fire hose of e-commerce exports from China regardless of season.
Faster demand than supply growth contributed to global short-term air rates in November reaching their highest level in nearly two years at $2.90 per kilogram, the sixth consecutive month of double-digit year-over-year growth, Xeneta reported. Spot rates are outpacing contract rates.The persistent supply-demand balance pushed load factors, a measure of capacity utilization, to 63% — the highest level in more than 30 months.
