Flying start to 2025 for airfreight, but will the market cool?

The global air cargo market cruised into 2025 on the back of 14 consecutive months of double-digit growth in demand as volumes climbed +11% year-on-year in December and average spot rates finished the year +15% higher, said industry analysts Xeneta.

That makes interesting reading for the U-Freight Group with our strong presence in the expedited international airfreight business.

While Xeneta is forecasting demand growth of +4-6% in 2025, chief airfreight officer, Niall van de Wouw says “cautious optimism remains tempered by susceptibility to geopolitical tensions, a subdued manufacturing outlook, and political interventions in an increasingly volatile world”.

“This rebalancing of the air cargo market from the extreme volatilities seen in 2023 is a clear reflection of the preparedness and maturity seen across the market in 2024. The efforts made by industry stakeholders ranging from strategic capacity allocation by airlines, securing capacity ahead of ‘hot’ e-commerce corridors by freight forwarders, and locking-in longer-term contracts by shippers, all contributed to a healthier industry based on longer-term relationships instead of a push for short-term gains,” van de Wouw added.

Van de Wouw also outlined the continuing impact e-commerce will have on air freight in 2025. He said: “We can put a ribbon around 2024. It was quite some year for air cargo. But this remains a market that is increasingly reliant on e-commerce volumes, while the general freight market, the bellwether of the global economy, remains muted. The signals from the manufacturing industry, particularly in Europe, are concerning but e-commerce continues to take up this slack and is projected to grow at +14% annually to 2026.

Looking ahead, Xeneta projects 2025 global air cargo demand to grow +4-6% year-on-year, continuing to outpace global cargo capacity supply growth of +3-4%.

The continued geopolitical tensions, threats of Trump tariffs, tightened measures of de minimis threshold related to e-commerce, increased security risks from rising global tension. and extreme weather and natural disasters pose many uncertainties for this year’s global air cargo demand and supply chain.

While the threat of further US East Coast port strikes seems to have now been removed, any further disruptions to global ocean freight is likely to see shippers resorting to the predictability of air freight for urgent shipments, triggering further spikes in air cargo rates.

Van de Wouw said: “The lesson these market conditions are forcing all stakeholders to learn is that they cannot rely solely on historical trends as a foundation for purchasing decisions. Heightened market volatility due to rising global uncertainties will continue to impact air cargo demand and this could force air freight rates to fluctuate significantly. Therefore, embracing more flexible freight rate negotiation methods, such as indexing or transparent pricing, could foster mutual understanding and better collaboration across the industry this year.

“Without this insight, what lies ahead for air cargo in 2025 may remain a guessing game for many less informed market players. Will January 2025 be the first time in 14 months we won’t see double digit growth? At the start of last year, the answer would most likely have been affirmative, but now the market must wait and see what happens because this year is starting off with a much higher base.

The complete article can be read on the Xeneta website here: https://www.xeneta.com/news/a-flying-start-to-2025-but-after-14-months-of-double-digit-demand-growth-air-cargo-stakeholders-remain-cautious

For more information about the U-Freight Group’s global air freight forwarding and logistics services, or our e-commerce logistics operations, please visit the relevant pages of this website or contact your local office, details of which can be seen here: https://www.ufreight.com/locationss