2025 began with lower-than-expected growth in global air cargo demand in January of just +2% year-on-year compared to the double-digit monthly increases throughout last year but fears of a trade war over tariffs impacting volumes and growth forecasts for the year are premature, say industry analysts Xeneta.
January’s data was impacted by the earlier Lunar New Year reducing volumes out of China, but the big drop in demand was still as a surprise, says Xeneta’s Chief Airfreight Officer, Niall van de Wouw.
“The lower growth in air cargo demand in January was not down to President Trump, nor, entirely, the earlier Lunar New Year. It also compares to an unusually high comparison in January 2024,” van de Wouw said.
“Nonetheless, the air cargo market in entering a period of uncertainty, which makes planning extremely challenging.
“The implementation of tariffs by the US and the responses of China, Canada, and Mexico are just the start of a negotiation. It’s all transactional. We could end up in a global trade war, but in the case of President Trump, we have someone who’s ready to negotiate everything and the rest of the world can influence the outcome, as we have already seen. The consistency here is he’s looking for a deal,” van de Wouw said.
“We don’t know what will happen, but we do understand that uncertainty is not good for trade confidence, and it doesn’t help investment. People like to see some kind of stability before they put their money down,” he added. “If I was a shipper, I would not be rushing to make too many plans or take any drastic measures. I’d have my team ready to do things differently, but I’d wait to see what actually happens because, right now, there’s a lot of sabre rattling and noise but little clarity.”
Are e-commerce volumes sustainable?
Cross-border e-commerce demand was one of the main pillars fuelling global growth in air cargo volumes since Q3 2023. Is this now at risk?
In 2024, China cross-border e-commerce shipments to the US accounted for 25% of its total global sales – and filled over 50% of cargo capacity from China to the US. Suspension of the de minimis exemption could, therefore, have a profound impact on air freight capacity between China and the US and beyond by prohibiting these import shipments from de minimis entry, increasing costs, and adding time-consuming entry filing requirements and potential customs delays.
Van de Wouw said: “E-commerce volumes out of China grew +20-30% last year, following similar growth in 2023, so it's going to take a sledgehammer to crack that level of consumer demand and I'm not sure blocking de minimis alone is enough. China e-commerce was not set up to take advantage of de minimis loopholes - it has taken advantage of consumer demand for cheap, fast goods.
“E-commerce products may be slightly more expensive if de minimis is removed, but they will still be cheaper than buying through retailers in the US – but delays in receiving the goods due to operational disruptions could have a bigger impact than price because it takes away the attractiveness for consumers,” he added.
E-commerce giants ‘knew this day was coming’
China’s e-commerce giants also knew this day would come and will not allow a business model on this scale to collapse due to de minimis, van de Wouw said. "Even if de minimis is being blocked, the e-commerce retailers will still keep selling and shipping the goods. There may not be a significant impact on air freight rates in the short term in this scenario, even if it causes chaos at the receiving airport in the US.”
In the longer term, demand for e-commerce - and therefore freight rates - will only be impacted if the consumer feels the cheap price is not worth it if they face a longer wait to receive their goods. “In this scenario, we’d expect to see a major downward impact on freight rates at a global level – but to predict this now would be to ‘cry wolf’. Let’s wait and see. Maybe nothing changes," he said.
Impact on a suppressed general freight market
Van de Wouw says the winners of any muted growth in e-commerce volumes will be general freight shippers globally as capacity is deployed elsewhere, placing a downward pressure on rates in these new markets. But, general air freight demand has recorded no real growth in recent years and there’s little expectation of any significant upturn in its fortunes in 2025, he cautioned.
Air cargo market performance in January
Global air cargo chargeable weight in the first month of the year grew just +2% year-on-year, influenced also by the diminishing impact of ocean shipping disruptions.
As anticipated, global air cargo capacity showed a similarly modest growth of +2% in January, lowering the dynamic load factor to 57% in January, on par with a year ago. Dynamic load factor is Xeneta’s measurement of capacity utilisation based on volume and weight of cargo flown alongside available capacity.
Nevertheless, global air cargo spot rates in January remained +17% higher than a year ago, reaching USD 2.65 per kg and +56% above pre-pandemic 2019 levels. These elevated rates can be attributed to the e-commerce boom, limited air cargo capacity from slow aircraft production, flight rerouting due to Russian airspace closures, and the delayed adjustment of freight rates to supply-demand changes.
Month-on-month, January’s global air cargo spot rate fell -11%, a slower decline compared to the same period a year ago (-13%).
In terms of corridor trends, fronthaul trades on major global corridors continued to rise year-on-year in January. The largest increase was seen in trade from the Middle East and Central Asia to Europe, with the air cargo spot rate surging +63% from a year ago to USD 2.59 per kg, driven by ongoing Red Sea disruptions. This was followed by the Europe to North America corridor, where the spot rate grew +24% year-on-year to USD 2.36 per kg.
A strategic shift in freighter capacity towards Asia-related trades contributed to moderate rate growth from North East Asia. Spot rates from North East Asia to Europe increased +19% to USD 4.40 per kg, while rates to North America rose +14% to USD 4.38 per kg.
In contrast, backhaul trades on these corridors saw spot rate decline due to growing trade imbalances: ranging from -22% on the North America to North East Asia corridor to -2% on the North America to Europe corridor. The only corridor where air cargo spot rates grew in both directions was between Europe and Latin America, with high single-digit year-over-year increases.
