Air cargo starts 2025 worse than expected?
Global air cargo demand has started 2025 growing less than expected, rising just 2 percent in January from a year earlier, compared with double-digit monthly growth for all of last year, but industry analyst Xeneta said concerns about the tariff trade war affecting cargo volumes and growth forecasts for this year were premature.
Niall van de Wouw, chief air cargo officer at Xeneta, said January's figures were affected by the early Lunar New Year, which resulted in a reduction in the volume of goods exported from China, but the sharp drop in demand was still a surprise.
However, while markets are nervous about new tariffs imposed by the United States, particularly against China, and their subsequent retaliation, Van der Waugh sees no reason to change Xeneta's forecast of 4-6 percent global air cargo growth in 2025.
"The slowdown in air cargo demand growth in January was not due to Trump, nor was it entirely due to the early Lunar New Year. This is also an unusually high number compared to January 2024, "Van der Wo said.
"Nevertheless, the air cargo market is entering a period of uncertainty, which makes planning extremely challenging.
"The implementation of U.S. tariffs and the response from China, Canada and Mexico are only the beginning of negotiations. It's all business. We may end up in a global trade war, but as far as President Trump is concerned, we have seen that he is ready to negotiate everything and the rest of the world can influence the outcome. He's been looking for a deal, "Van der Wo said.
"We don't know what's going to happen, but we do understand that uncertainty is not good for trade confidence and it's not good for investment." People want to see some stability before they put their money in, "he added. "If I were a shipper, I wouldn't rush to make too many plans or take any drastic measures. I will prepare my team to do things differently, but I will wait and see what happens on the ground because at the moment, there are a lot of threats and noise but nothing clear."
Since the third quarter of 2023, cross-border e-commerce demand has been one of the main pillars driving global air cargo traffic growth. Is this trend now at risk?
In 2024, China's cross-border e-commerce exports to the United States accounted for 25 percent of its total global sales and more than 50 percent of the freight volume from China to the United States. As a result, suspending the minimum exemption could have a profound impact on air cargo capacity between the United States and China and beyond, as it would prohibit these imported goods from entering the country at a minimum, increasing costs, time-consuming entry declaration requirements and potential customs delays.
Van de Wouw said: "Last year, e-commerce transactions outside China grew by 20-30%, and 2023 achieved similar growth, so tough measures are needed to break this level of consumer demand, and I'm not sure that just blocking the minimum is enough." E-commerce in China was not set up to exploit minimal loopholes - it took advantage of consumer demand for cheap, fast goods.
"If minimum pricing is removed, e-commerce products may be slightly more expensive, but still cheaper than buying through U.S. retailers - but the delay in receiving due to operational disruptions could have a bigger impact than price, as it would make them less attractive to consumers," he added.
The e-commerce giants knew this day would come
Van der Wo said that China's e-commerce giants also knew that this day would come, and they would not allow a business model of this scale to collapse due to the minimum. "Even if it is at a minimum blocked, e-commerce retailers will continue to sell and ship goods. In this case, there may not be a significant impact on airfreight prices in the short term, even if it creates confusion at U.S. receiving airports."
In the long run, e-commerce demand (and shipping rates) will only suffer if consumers feel the low price is not worth it and have to wait longer to receive their goods. "In this scenario, we expect global freight rates to fall significantly - but predicting this now is crying Wolf." Let's wait and see. Maybe nothing will change, "he said.
The impact on the depressed general freight market
The winner from the slowdown in e-commerce volume growth will be the global general freight forwarders, as capacity will be deployed elsewhere, putting downward pressure on freight rates in these new markets, van der Woer said. But he warned that general air cargo demand has not grown in real terms in recent years and its fortunes are not expected to see any significant upturn in 2025.
Air cargo market performance in January
In the first month of the year, the weight of global air cargo charges increased by only 2% year-on-year, which was also affected by the lessening impact of ocean-going shipping disruptions.
As expected, global air cargo volumes also edged up 2 per cent in January, resulting in dynamic load factors falling to 57 per cent in January, unchanged from a year ago. Dynamic load factor is Xeneta's measure of capacity utilization based on cargo volume and cargo weight, as well as available capacity.
Still, the global spot price for air cargo in January was 17 percent higher than a year earlier at $2.65 per kilogram and 56 percent higher than the pre-pandemic level in 2019. These rising freight rates can be attributed to booming e-commerce, limited air cargo capacity due to slowing aircraft production, flight diversions due to the closure of Russian airspace, and delays in adjusting freight rates to changes in supply and demand.
On a month-on-month basis, global air cargo spot rates fell -11% in January, slowing from a year-ago decline of -13%.
The strategic shift of freight capacity to Asia-related trade has driven modest freight growth in Northeast Asia. Spot freight from Northeast Asia to Europe rose 19 percent to $4.40 per kilogram, while North American spot freight rose 14 percent to $4.38 per kilogram.
In contrast, spot freight rates for backhaul trade in these corridors fell as a result of growing trade imbalances: Spot freight rates for the North America-Northeast Asia corridor fell 22 per cent, and spot freight rates for the North America-Europe corridor fell 2 per cent. The only corridor that saw spot freight rates increase in both directions was between Europe and Latin America, with high single-digit year-on-year growth.
Niall van de Wouw, chief air cargo officer at Xeneta, said January's figures were affected by the early Lunar New Year, which resulted in a reduction in the volume of goods exported from China, but the sharp drop in demand was still a surprise.
However, while markets are nervous about new tariffs imposed by the United States, particularly against China, and their subsequent retaliation, Van der Waugh sees no reason to change Xeneta's forecast of 4-6 percent global air cargo growth in 2025.
"The slowdown in air cargo demand growth in January was not due to Trump, nor was it entirely due to the early Lunar New Year. This is also an unusually high number compared to January 2024, "Van der Wo said.
"Nevertheless, the air cargo market is entering a period of uncertainty, which makes planning extremely challenging.
"The implementation of U.S. tariffs and the response from China, Canada and Mexico are only the beginning of negotiations. It's all business. We may end up in a global trade war, but as far as President Trump is concerned, we have seen that he is ready to negotiate everything and the rest of the world can influence the outcome. He's been looking for a deal, "Van der Wo said.
"We don't know what's going to happen, but we do understand that uncertainty is not good for trade confidence and it's not good for investment." People want to see some stability before they put their money in, "he added. "If I were a shipper, I wouldn't rush to make too many plans or take any drastic measures. I will prepare my team to do things differently, but I will wait and see what happens on the ground because at the moment, there are a lot of threats and noise but nothing clear."
Since the third quarter of 2023, cross-border e-commerce demand has been one of the main pillars driving global air cargo traffic growth. Is this trend now at risk?
In 2024, China's cross-border e-commerce exports to the United States accounted for 25 percent of its total global sales and more than 50 percent of the freight volume from China to the United States. As a result, suspending the minimum exemption could have a profound impact on air cargo capacity between the United States and China and beyond, as it would prohibit these imported goods from entering the country at a minimum, increasing costs, time-consuming entry declaration requirements and potential customs delays.
Van de Wouw said: "Last year, e-commerce transactions outside China grew by 20-30%, and 2023 achieved similar growth, so tough measures are needed to break this level of consumer demand, and I'm not sure that just blocking the minimum is enough." E-commerce in China was not set up to exploit minimal loopholes - it took advantage of consumer demand for cheap, fast goods.
"If minimum pricing is removed, e-commerce products may be slightly more expensive, but still cheaper than buying through U.S. retailers - but the delay in receiving due to operational disruptions could have a bigger impact than price, as it would make them less attractive to consumers," he added.
The e-commerce giants knew this day would come
Van der Wo said that China's e-commerce giants also knew that this day would come, and they would not allow a business model of this scale to collapse due to the minimum. "Even if it is at a minimum blocked, e-commerce retailers will continue to sell and ship goods. In this case, there may not be a significant impact on airfreight prices in the short term, even if it creates confusion at U.S. receiving airports."
In the long run, e-commerce demand (and shipping rates) will only suffer if consumers feel the low price is not worth it and have to wait longer to receive their goods. "In this scenario, we expect global freight rates to fall significantly - but predicting this now is crying Wolf." Let's wait and see. Maybe nothing will change, "he said.
The impact on the depressed general freight market
The winner from the slowdown in e-commerce volume growth will be the global general freight forwarders, as capacity will be deployed elsewhere, putting downward pressure on freight rates in these new markets, van der Woer said. But he warned that general air cargo demand has not grown in real terms in recent years and its fortunes are not expected to see any significant upturn in 2025.
Air cargo market performance in January
In the first month of the year, the weight of global air cargo charges increased by only 2% year-on-year, which was also affected by the lessening impact of ocean-going shipping disruptions.
As expected, global air cargo volumes also edged up 2 per cent in January, resulting in dynamic load factors falling to 57 per cent in January, unchanged from a year ago. Dynamic load factor is Xeneta's measure of capacity utilization based on cargo volume and cargo weight, as well as available capacity.
Still, the global spot price for air cargo in January was 17 percent higher than a year earlier at $2.65 per kilogram and 56 percent higher than the pre-pandemic level in 2019. These rising freight rates can be attributed to booming e-commerce, limited air cargo capacity due to slowing aircraft production, flight diversions due to the closure of Russian airspace, and delays in adjusting freight rates to changes in supply and demand.
On a month-on-month basis, global air cargo spot rates fell -11% in January, slowing from a year-ago decline of -13%.
The strategic shift of freight capacity to Asia-related trade has driven modest freight growth in Northeast Asia. Spot freight from Northeast Asia to Europe rose 19 percent to $4.40 per kilogram, while North American spot freight rose 14 percent to $4.38 per kilogram.
In contrast, spot freight rates for backhaul trade in these corridors fell as a result of growing trade imbalances: Spot freight rates for the North America-Northeast Asia corridor fell 22 per cent, and spot freight rates for the North America-Europe corridor fell 2 per cent. The only corridor that saw spot freight rates increase in both directions was between Europe and Latin America, with high single-digit year-on-year growth.
