The Future of Air Cargo: Growth Trends and Challenges for 2025

As the air cargo industry soars toward 2025, the pace of growth is expected to decelerate from record highs. While the short-term outlook remains optimistic, challenges loom on the horizon, according to the International Air Transport Association (IATA). Here’s an in-depth look at the industry’s prospects, trends, and obstacles.

A Slower Climb for Air Cargo Demand

In 2025, global air cargo volumes are forecasted to reach 80 million tons, marking a 5.8% increase from 2024. This growth is a notable slowdown from the double-digit surge seen in 2024, a year shaped by lingering disruptions in ocean shipping and robust e-commerce activity. Despite the tempered growth, demand remains strong, driven by tight freighter capacity and continued cross-border e-commerce expansion.

IATA’s prediction aligns with insights from other market analysts. Freight data provider Xeneta anticipates air cargo demand growth between 4% and 6%, while consultancy Rotate pegs it at 4%. Logistics giant DSV, however, forecasts flat growth.

A Record-Setting Fourth Quarter

The final quarter of 2024 is shaping up to be another milestone. Unlike traditional holiday-driven peak seasons, this year’s volumes have remained consistently high, reflecting a robust demand environment. Businesses have adopted proactive strategies, securing space through short-term contracts rather than relying on last-minute bookings, which has kept pricing stable.

Revenue and Capacity Outlook

Cargo revenue for airlines is projected to hit $157 billion in 2025, a 5.4% increase over 2024. Air cargo’s share of total airline revenues will rise to 15.6%, compared to 12% pre-pandemic. Although capacity is set to grow by 6.4%, it’s unlikely to outpace demand, potentially exerting downward pressure on rates. The demand for widebody freighters remains high, particularly on trans-Pacific routes where dedicated freighter capacity dominates.

E-Commerce: The Driving Force

Direct-to-consumer e-commerce continues to be the primary engine behind air cargo growth. In 2024, e-commerce accounted for more than 50% of air cargo volumes out of Asia. This shift has displaced traditional commodities like apparel and automotive parts, pushing yields higher. Looking ahead, the rebound of the B2B airfreight market, fueled by demand for semiconductors and advanced computing technologies, could provide additional momentum.

The Red Sea and Regulatory Challenges

Geopolitical factors, such as the ongoing Red Sea conflict, have pushed businesses toward air transport as ocean shipping rates climb. In some cases, delays and diversions have narrowed the cost gap between air and ocean freight. However, increased regulatory scrutiny on e-commerce shipments and potential trade wars could dampen growth in the sector.

Economic and Political Uncertainties

While the global economy remains favorable for air cargo, with merchandise trade growth projected at 3% by the World Trade Organization, several risks persist. These include inflationary pressures from potential U.S. tariffs, regulatory changes, and uncertainty surrounding the return of Donald Trump as U.S. president. On the upside, lower jet fuel prices and efficiency gains are expected to bolster financial performance.

Challenges for Airlines

Airlines face continued headwinds, including supply chain disruptions that limit fleet modernization and rising labor costs. Nonfuel unit costs are projected to increase, while tax burdens may grow as pandemic-era tax advantages are exhausted. Despite these challenges, airlines are leveraging lower oil prices and focusing on decarbonization and efficiency to sustain profitability.

Looking Ahead

As air cargo enters a new phase of growth, carriers must navigate a complex landscape of opportunities and challenges. From the rise of e-commerce to geopolitical and economic uncertainties, the ability to adapt and innovate will be crucial. For shippers and businesses, staying ahead of these trends will be key to optimizing supply chain strategies in 2025 and beyond.

At iHeavyHaul.com, we understand the evolving dynamics of global logistics. Our expertise in freight brokerage and cross-border trucking solutions ensures seamless, reliable service tailored to your needs. Stay connected with us for the latest industry insights and solutions to keep your business moving forward.