The global air freight industry is currently navigating a period marked by significant deceleration in demand growth, profound impacts from evolving trade policies, and a complex interplay of financial dynamics. While the first half of 2025 has seen overall demand growth slow considerably, particularly in June, the sector continues to demonstrate resilience, driven by the transformative influence of e-commerce and strategic reconfigurations of global trade lanes. Financial health remains a delicate balance, with cargo revenues experiencing a notable downgrade in forecasts, yet overall airline profitability is projected to strengthen slightly due to lower fuel prices offsetting rising labor and supply chain costs. Despite immediate headwinds, long-term projections indicate sustained growth, underscoring air freight’s indispensable role in global commerce. This report offers a detailed statistical review and analysis of these multifaceted influences, providing a data-driven understanding of the current economic landscape and future trajectories. In particular, the analysis draws on authoritative data from the air transport association IATA as a primary source. Looking ahead, the air cargo outlook market faces both opportunities and uncertainties, with trends in capacity and demand expected to evolve in the coming months.

Introduction: The Strategic Importance of Air Freight in Global Commerce

The air freight industry stands as a cornerstone of the global economy, serving as a pivotal trade facilitator that underpins economic development and generates millions of jobs worldwide. Its significance is underscored by its substantial contribution to global trade: the sector transports over USD 8 trillion worth of goods annually, accounting for approximately 33% of total world trade by value. This highlights its disproportionate importance in the movement of high-value and time-sensitive commodities.

Air freight offers unparalleled speed and reliability, providing a distinct competitive advantage over other transportation modes. This enables rapid cross-border delivery across vast distances, a capability indispensable for industries that rely on timely delivery of critical goods. Sectors such as healthcare, high-tech manufacturing, and fashion are heavily dependent on air cargo for their operational continuity. A compelling example of this critical dependency is the transport of temperature-sensitive pharmaceuticals, including vaccines, which relies heavily on air cargo, contributing to immunization programs that prevent up to 3 million child deaths annually. The burgeoning e-commerce sector further amplifies this demand, with the express segment projected to expand at a faster growth rate through 2030, driven by consumer and business expectations for shorter delivery times. The demand for air is increasingly driven by eCommerce growth, regional economic momentum, and shifts in consumer behavior, as these factors shape capacity utilization and transportation needs across global markets. The air freight industry’s health, therefore, serves as a leading indicator for specific, high-value segments of the global economy, reflecting the vitality of globally interconnected supply chains. A contraction or significant slowdown in air cargo implies broader economic friction within these critical sectors, impacting innovation, healthcare, and consumer markets.

Presently, the industry operates within a complex and dynamic economic landscape. It is characterized by a notable slowdown in demand growth, exacerbated by escalating geopolitical tensions and a shifting global trade policy environment. Despite these immediate headwinds, long-term projections from major industry players like Boeing and Xeneta maintain an optimistic outlook, primarily driven by the sustained expansion of e-commerce and the growth of emerging markets. This report aims to dissect these multifaceted influences, providing a data-driven analysis of the current economic outlook.

Current Market Performance (H1 2025): A Detailed Statistical Review

The first quarter of 2025 saw robust growth in air cargo volumes and demand, with several key markets reporting notable percentage increases. However, the first half of 2025 presented a mixed picture for the air freight industry, with this initial momentum giving way to a significant deceleration in demand by mid-year, largely influenced by evolving global trade dynamics.

Global Demand and Capacity Dynamics

The industry’s overall air cargo demand, measured in Cargo Tonne-Kilometers (CTK), increased by a modest 0.8% year-on-year (YoY) in June 2025. This represented a notable slowdown compared to the 2.2% growth recorded in May and the more robust 5.8% growth observed in April. This progressive deceleration in demand reflects the pervasive market uncertainty stemming from ongoing trade tensions. International CTK experienced a slightly higher 1.6% YoY rise in June , suggesting that domestic markets might have faced even greater challenges or had less impact on the global aggregate.

Global available cargo space, measured in Available Cargo Tonne-Kilometers (ACTK), expanded by 1.7% YoY in June, reaching 51.4 billion ACTK. International ACTK grew by 2.8%. This expansion in cargo capacity, which includes both passenger bellyhold and dedicated freighter aircraft, is being closely managed to meet rising demand and balance supply in the air cargo market. This expansion in capacity, outpacing the growth in demand, led to a decrease in capacity utilization. The Cargo Load Factor (CLF) decreased by 0.4 percentage points compared to June 2024, settling at 45.5% globally. International CLF stood at 50.3%, experiencing a -0.6 percentage point (ppt) YoY decline. This trend indicates that available capacity is growing faster than demand, leading to less efficient utilization of aircraft space. The observation that spot rates declined for two consecutive months (May-June) as capacity overtook demand further reinforces this market softening. When considering the types of capacity, freighter capacity plays a significant role in shaping market dynamics, as shifts in dedicated cargo aircraft availability can directly impact rates and industry resilience. This shift from a seller’s market, characterized by tight capacity and elevated rates, to a more balanced or even buyer’s market will likely intensify pricing pressures on airlines and could potentially lead to a significant slump in the second half of the year, potentially cancelling the normal peak season.

For the total market in the first half of 2025 (year-to-date), CTK increased 2.8%, with ACTK up 3.0%, resulting in a slight CLF decrease of 0.1 percentage points, maintaining a level of 45.2%. International CTK rose 3.5% YTD, ACTK 4.3% YTD, and CLF decreased 0.4 percentage points, at 50.7%. Overall, global air cargo demand grew +3% YoY through the first half of 2025, but June showed a marked slowing to just +1%. Capacity growth kept pace, increasing +3.8% YTD.

Earlier in 2025, the market exhibited different dynamics. April 2025 demonstrated robust performance with CTK climbing 5.8% YoY, and international CTK up 6.5%. ACTK expanded 6.3%. This growth was partly supported by a phenomenon known as “front-loading,” where businesses accelerated shipments of fashion and consumer goods ahead of the US tariff changes on May 2, 2025, regarding the lift of the de minimis allowance. By May 2025, CTK climbed 2.2% YoY, with international CTK up 3.0%. ACTK increased 2.0%. This slowing momentum was explicitly attributed to the unwinding of the front-loading effect. This pattern reveals that a portion of the earlier demand spikes was not organic, sustained growth but rather a temporary distortion driven by policy deadlines. The subsequent decline in June, therefore, provides a more accurate, albeit weaker, reflection of underlying market demand. Such volatility complicates accurate market forecasting and capacity planning, highlighting how rapidly shifting trade policies can create short-term market distortions.

January 2025 saw the global air cargo market continuing its positive growth trend with a 3.2% increase YoY. ACTK increased 6.8%. However, this was a deceleration from the 6.1% growth seen in December 2024. In February 2025, total demand declined by 0.1% compared to February 2024 levels, marking the first decline since mid-2023, primarily due to the extraordinary growth experienced in February 2024.

The following table summarizes the key performance indicators for global air cargo in June 2025 and year-to-date.

Table 1: Global Air Cargo Key Performance Indicators (June 2025 & YTD)

Metric	June 2025 (% YoY)	June 2025 (Level)	YTD 2025 (% YTD)	YTD 2025 (Level)
TOTAL MARKET
CTK	0.8%	–	2.8%	–
ACTK	1.7%	51.4 billion ACTK	3.0%	–
CLF (%-pt)	-0.4%	45.5%	-0.1%	45.2%
International
CTK	1.6%	–	3.5%	–
ACTK	2.8%	–	4.3%	–
CLF (%-pt)	-0.6%	50.3%	-0.4%	50.7%

Export to Sheets

Source: IATA 

Regional Performance Breakdown (June 2025)

Regional performance in June 2025 exhibited significant divergence, reflecting localized impacts of geopolitical and trade developments. Asia-Pacific demonstrated the strongest growth among all regions, with a robust 9.0% YoY increase in demand and a 7.8% rise in capacity. Asia Pacific notably led international air cargo growth with an 8.3% YoY increase in June, driven largely by strong performance on key international routes connecting the region to major global markets. Year-to-date (May), APAC demand continued to lead all regions at +8.3%.

In stark contrast, North America experienced the steepest decline, with demand falling by a significant 8.3% and capacity decreasing by 5.1%. This substantial decline is directly attributed to the trade measures implemented by the US government in recent months, which have impacted international routes and reduced transpacific and transatlantic air freight volumes. Year-to-date (May), North America had grown +4.8% , indicating a sharp reversal in June. This stark contrast in regional performance, particularly between Asia-Pacific’s robust growth and North America’s steep decline, underscores that the global air freight market is not a homogenous entity. Its performance is highly sensitive to regional political and economic developments, as well as shifts in international routes, necessitating a granular, region-specific analysis for all stakeholders.

Europe saw a modest 0.8% increase in demand alongside a 2.6% rise in capacity. The Middle East posted a 3.2% drop in demand, despite a 1.5% increase in capacity. This downturn is linked to rising geopolitical tensions, which led to airspace restrictions affecting operations at key regional hubs and causing flight cancellations or rerouting on important international routes. Latin America reported a 3.5% increase in demand, though their capacity slipped by 0.4%. Latin America had previously led international air cargo growth in April with a surprising 12.5% YoY increase, largely due to increased activity on international routes connecting the region to North America and Europe. Year-to-date (May), LATAM grew +7.2%. Africa registered a 3.9% growth in demand and a 6.2% increase in capacity. Notably, Africa’s carriers saw a significant 3.9% YoY rise in June 2025 after experiencing a 3% contraction in May, with international routes to Europe and the Middle East contributing to the rebound.

The following table provides a detailed breakdown of regional air cargo performance.

Table 2: Regional Air Cargo Performance (June 2025)

Region	World Share (% of industry CTKs in 2024)	CTK (% YoY)	ACTK (% YoY)	CLF (%-pt YoY)
Asia-Pacific	34.2%	9.0%	7.8%	0.6%
North America	25.8%	-8.3%	-5.1%	-1.3%
Europe	21.5%	0.8%	2.6%	-0.9%
Middle East	13.6%	-3.2%	1.5%	-2.2%
Latin America	2.9%	3.5%	-0.4%	1.4%
Africa	2.0%	3.9%	6.2%	-0.9%

Export to Sheets

Source: IATA 

Key Trade Lane Analysis (June 2025)

Analysis of key trade lanes reveals a strategic reconfiguration of global air cargo flows in response to shifting market conditions and policy impacts. The Asia-North America corridor, historically the largest and most active cargo route, is contracting for the second consecutive month, showing a -4.8% YoY decline in June. Compared to the same period last year, this represents a notable shift in demand. In May, this lane experienced a significant -10.7% YoY fall, representing a 12.3 percentage point decrease compared to April 2025, primarily due to the unwinding of front-loading effects and the end of the de minimis tariff exemption. Capacity from Asia to the US West Coast is expected to drop 6.2% and to the East Coast 1.7% starting in August, as carriers pull back due to faltering demand and declining rates. The simultaneous decline of this major lane and the strong, sustained growth of other routes suggests a strategic re-routing of global trade flows, potentially to circumvent tariff impacts or leverage more favorable conditions. The observation that production has relocated to countries with more favorable exporting conditions and that logistics providers are routing goods through the Middle East, Africa, and Europe to utilize transshipment options provides direct evidence of this adaptive behavior. This demonstrates the air freight industry’s inherent flexibility and resilience in the face of external shocks, implying that future growth opportunities may arise in unexpected corridors.

In contrast, the Europe-Asia lane continued its strong growth trajectory, increasing +10.6% YoY, marking an impressive 28 consecutive months of growth. This sustained performance is supported by robust flows of tech, pharma, and luxury goods between regional hubs. The transatlantic North America-Europe corridor, the second busiest route globally, still delivered a moderate +4.8% YoY increase, extending its growth streak to 17 consecutive months. The Middle East-Asia lane showed positive momentum with a +2.8% YoY increase, marking growth for the fourth consecutive month. Within Asia, strong internal growth was demonstrated at +8.7% YoY, continuing a trend of 20 consecutive months of growth. Within Europe, performance was weak, decreasing 1.7% YoY, but showed a month-on-month increase of 2.9% in June, benefiting from seasonal inventory flows and steady e-commerce demand. Compared to the same period last year, intra-European volumes remain subdued.

Conversely, the Europe-Middle East corridor significantly decreased by -4.5% YoY, marking 6 consecutive months of decline. This corridor also lost 3.0 percentage points compared to the previous month due to geopolitical tensions. Africa-Asia experienced a -4.8% decrease in demand, marking 2 consecutive months of decline.

Weekly trends from WorldACD for Week 30 (July 21-27, 2025) indicated some rebound in specific lanes. Tonnages from Hong Kong to the US rebounded with a +5% week-on-week (WoW) increase, and China to US also rebounded +4% WoW, following flight cancellations due to Typhoon Wipha. This contributed to a +3% WoW gain for Asia Pacific as a whole to the US. Hong Kong to Europe only partially bounced back with a +2% WoW increase, while China to Europe tonnages dipped further by -2% WoW. Spot rates from South Korea to the US, a volatile market, rebounded with a +29% WoW increase to an average of $6.01 per kilo, reaching its highest level since week 8. Overall, worldwide air cargo markets were relatively stable in July, with average tonnages and rates largely unchanged in week 30. Worldwide chargeable weight in week 30 was +5% higher than the equivalent week during the same period last year.

The following table details the performance of key air freight trade lanes.

Table 3: Key Air Freight Trade Lane Performance (June 2025)

Trade Lane	YoY Growth (%)	Notes	Market Share of Industry (%)
Asia-North America	-4.8%	7 consecutive months of decline	24.4%
Europe-Asia	+10.6%	28 consecutive months of growth	20.5%
Europe-North America	+4.8%	17 consecutive months of growth	13.3%
Middle East-Asia	+2.8%	4 consecutive months of growth	7.4%
Within Asia	+8.7%	20 consecutive months of growth	7.0%
Europe-Middle East	-4.5%	6 consecutive months of decline	5.7%
Africa-Asia	-4.8%	2 consecutive months of decline	1.4%

Export to Sheets

Source: IATA 

Financial Health and Profitability Outlook

The financial health of the air freight industry in 2025 presents a nuanced picture, characterized by significant adjustments in revenue forecasts and a delicate balance of cost drivers impacting overall profitability. Many key financial metrics were previously estimated at higher levels, but recent revisions reflect the impact of changing economic and trade conditions on the industry’s outlook.

Cargo Revenue Trends and Forecasts

Initial projections from IATA were optimistic, forecasting 2025 cargo revenue to reach $157 billion, representing a 5.7% increase from 2024. This estimate was tied to an anticipated 5.8% growth in air cargo traffic. However, a more recent IATA forecast significantly downgraded this outlook, now expecting cargo revenues to contract by 4.7% to $142 billion in 2025.

This substantial revision is primarily attributed to a confluence of deteriorating macroeconomic conditions and protectionist trade policies. Global economic growth is slowing, largely influenced by trade-dampening protectionist measures, including tariffs. The OECD lowered its predicted global GDP growth for 2025 by 0.2 percentage points, now standing at +2.9%. The World Bank expects global GDP growth to weaken to 2.3% in 2025. The IMF projects global growth at 3.0% for 2025. The US economy is expected to be particularly affected, shedding a full percentage point to approximately 1.5% in 2025. The revised forecast also anticipates air cargo growth to decelerate sharply to just 0.7% in 2025, a drastic reduction from the 11.3% growth observed in 2024. This is a significant downgrade from the previous 5.8% prediction for 2025.

The decline in jet fuel prices, while beneficial for overall airline operating costs, paradoxically reduces the ability of airlines to levy fuel surcharges, which historically included an extra profit margin above the direct cost. This directly impacts cargo yields and, consequently, revenues. Furthermore, the removal of the “de minimis” exemption, which allowed parcels valued under $800 to enter the US free of customs procedures, will directly reduce trade volumes and make air freight less attractive for certain types of shipments, particularly e-commerce parcels. A significant decline in ocean cargo rates also makes air freight comparatively less attractive for goods that are not strictly time-sensitive. Drewry expects East-West container rates to drop about 10% in the second half of 2025 due to growing oversupply. The substantial downgrade in IATA’s 2025 cargo revenue forecast within a relatively short timeframe directly reflects the extreme sensitivity of the air freight market to rapidly evolving global economic conditions and, most importantly, the immediate and far-reaching effects of trade policy shifts. This level of forecast volatility demands exceptional agility from air freight businesses, as investment decisions and long-term contracts based on earlier, more optimistic projections may require urgent re-evaluation.

Cargo Yields and Rates

Cargo yields continued to soften in June 2025, with overall freight rates down 2.5% YoY, although they experienced a slight month-on-month (MoM) increase of 0.9%. Recent air freight rates have reflected ongoing market fluctuations, with trends shaped by factors such as lower oil prices, shifting demand from e-commerce, and increased capacity availability. These elements, along with geopolitical disruptions, continue to influence future rate movements and contribute to the current volatility in the air freight market. The cargo yield is specifically expected to decline by 5.2% in 2025, reflecting the combination of slower demand growth and lower oil prices impacting fuel surcharges. Average global air cargo rates fell -1% YoY but edged up +2.0% MoM in June after declining the previous month. Notably, spot rates have declined YoY for two consecutive months (May-June), a direct consequence of capacity beginning to overtake demand for the first time in over a year and a half.

Despite the recent softening, a crucial nuance emerges: 2025 yields are still anticipated to remain approximately 30% above pre-pandemic levels. This resilience is significantly bolstered by strong e-commerce demand, particularly from Asia. This suggests that the air cargo industry, having benefited from the extraordinary market conditions during the pandemic (e.g., ocean shipping disruptions, reduced passenger belly capacity), has established a significantly higher baseline for yields than existed historically. While the current softening represents a correction from an unsustainably high peak, it is not necessarily a full return to pre-pandemic low profitability. However, the increasing competitiveness from declining ocean freight rates poses a significant threat to maintaining this yield premium, potentially forcing air cargo to compete more aggressively on price for non-time-sensitive goods.

WorldACD reported that worldwide average rates rose by just +1% WoW in week 30 (late July), reaching an average of US$2.45 per kilo, which is more or less exactly their level in the equivalent week last year. Spot rates worldwide also rose by an average of +1% WoW to $2.66 per kilo, though they are down -1% YoY.

Overall Airline Industry Profitability

The broader airline industry is expected to achieve a net profit of $36.0 billion in 2025, an improvement from the estimated $32.4 billion earned in 2024, but slightly below the previously projected $36.6 billion. The net profit margin is forecasted at 3.7% in 2025, an improvement from 3.4% in 2024, but it remains meager, approximately half the average profitability across all global industries. Total revenues are projected to reach a record high of $979 billion (+1.3% on 2024), though this is below the ambitious $1 trillion previously projected. Changes in passenger demand play a critical role in shaping available capacity and revenue projections, as airlines must adjust their strategies to align with shifting trends in passenger traffic. The buffer between profit and loss for the industry remains thin, equating to just $7 per passenger. This thin margin highlights the industry’s vulnerability to any new tax, increase in airport or navigation charge, demand shock, or costly regulation.

Key Cost Drivers

Several factors influence shipping and freight rates, including ongoing labor negotiations at U.S. ports, geopolitical crises such as the Red Sea conflict, policy changes in the U.S. regarding imports, and broader economic conditions.

Several key cost drivers influence the industry’s financial performance. Jet fuel prices are expected to average $86-$87 per barrel in 2025, a significant decrease from the $99 average in 2024. This translates into a total fuel bill of $236 billion to $248 billion, representing a decline of 4.8% YoY despite a projected 6% rise in fuel consumption. Jet fuel prices dropped by 12% YoY in June 2025, marking the fourth consecutive annual decline. However, prices did edge up 8.6% MoM in June.

Labor costs are expected to be a primary area for cost escalation, totaling $253 billion in 2025, an increase of 7.6% from 2024, driven by sizable wage increases for pilots, flight attendants, and mechanics. Despite productivity gains, average labor unit costs are likely to rise by 0.5% in 2025. Overall non-fuel unit costs are expected to inch up to $692 billion in 2025. Persistent supply chain troubles at aircraft and engine manufacturers limit airlines’ ability to modernize or grow their fleets, driving up costs in areas such as aircraft leasing and maintenance. The aircraft backlog has risen to a record-high 17,000 aircraft, indicating a shortage of 5,400 aircraft (18% of the active fleet) that may take 3-5 years to resolve. Additionally, the average cost of Sustainable Aviation Fuel (SAF) in 2025 is estimated to be 4.2 times that of jet fuel, contributing to additional operational expenses.

The overall airline industry’s profitability is projected to strengthen slightly in 2025, primarily due to lower jet fuel prices and efficiency gains. However, this positive impact is significantly counteracted by increased labor costs and persistent supply chain issues. This highlights a precarious equilibrium where the benefits from one major cost component (fuel) are being eroded by escalating expenses in other critical areas (labor, fleet acquisition/maintenance). This means that even in a relatively “good year” for the industry, profitability remains highly susceptible to external shocks, new taxes, or regulatory burdens. Strategic cost control, particularly in non-fuel areas, and efficient capital deployment become paramount for maintaining financial viability.

Table 4: Air Cargo Revenue and Profitability Forecasts (2025)

Metric	2024 (Estimated)	2025 (Initial Forecast)	2025 (Revised Forecast)
Cargo Revenue (USD Billions)	–	$157	$142 (-4.7% YoY from 2024)
Cargo Volume (Million Tonnes)	72.5 (projected)	80	69 (+0.6% YoY from 2024)
Cargo Yield (% Change)	-3.5% (2024 vs 2023)	Stable (30% above pre-pandemic)	-5.2%
Overall Airline Net Profit (USD Billions)	$32.4	$36.6	$36.0
Net Profit Margin (%)	3.4%	3.6%	3.7%
Total Airline Revenues (USD Billions)	$965	$1,000	$979 (+1.3% YoY from 2024)
Total Airline Expenses (USD Billions)	–	$940	$913 (+1.0% YoY from 2024)
Average Jet Fuel Price (USD/barrel)	$99	$87	$86
Total Fuel Bill (USD Billions)	$261	$248	$236 (-4.8% YoY from 2024)
Labor Costs (USD Billions)	–	$253 (+7.6% YoY from 2024)	$253 (+7.6% YoY from 2024)

Export to Sheets

Source: IATA 

Driving Forces and Market Influencers

The economic outlook of the air freight industry is shaped by a complex interplay of global trade policies, geopolitical tensions, the relentless growth of e-commerce, and the integration of advanced technologies. Trade growth, driven by global economic and manufacturing expansion, significantly impacts the air cargo market by influencing trade volume, tariffs, and the efficiency of international supply chains.

Global Trade Policies and Geopolitical Tensions

Trade policies, particularly those implemented by the US government, have demonstrably led to a significant decline in air cargo traffic to and from North America. This is a direct consequence of protectionist policies. The removal of the “de minimis” exemption, which previously allowed parcels valued under $800 to enter the US free of customs procedures, is projected to reduce trade volumes and make air freight comparatively less attractive than ocean cargo for certain shipments. This policy change significantly impacted the critical Asia-North America corridor, which saw a -10.7% YoY fall in May 2025. While emerging clarity around US tariffs may offer businesses greater confidence in planning, new trade deals are concurrently significantly raising tariffs on goods imported into the US, with the long-term economic impact remaining uncertain. In response to these U.S. tariffs, many countries are retaliating or planning to retaliate, amplifying the widespread impact on international trade policies and cross-border commerce. The overall average effective tariff rate is estimated at 18% on imports of goods, the highest since the 1930s, making the 2025 situation more challenging than previous trade tensions. The Purchasing Managers’ Index (PMI) for new export orders, despite a slight improvement, remained below the neutral threshold at 49.3 in June, indicating continued contraction and reflecting ongoing pressure from recent US trade policy shifts. The research consistently identifies trade policies and geopolitical tensions as overriding factors influencing air cargo performance. The direct causal link is evident in the sharp decline of the Asia-North America lane and the overall demand deceleration. This suggests that the industry’s economic fate in the short to medium term is heavily tied to political decisions rather than purely market forces.

Geopolitical conflicts also exert a profound influence. Military conflict in the Middle East has directly impacted air cargo operations, leading to a 3.2% fall in cargo volumes for Middle Eastern carriers in June. These conflicts have resulted in airspace restrictions, flight cancellations, and forced rerouting strategies, causing longer transit times and higher operational costs for airlines in the region. The industry’s adaptation through re-routing signifies that these policies don’t just reduce trade but actively reconfigure its geography. The air freight industry’s economic outlook is acutely susceptible to political and diplomatic developments, creating a substantial layer of uncertainty for strategic planning, necessitating proactive engagement.

E-commerce as a Sustained Growth Driver

The burgeoning e-commerce sector continues to be a primary driver of demand for rapid, cross-border transportation, significantly boosting the air freight industry. As consumers increasingly expect swift deliveries, air freight has become an indispensable component of the supply chain. E-commerce is projected to grow 14% annually until 2026, and global air cargo demand is expected to grow around 4-6% in 2025. This robust growth is underpinned by strong demand for air freight, driven not only by e-commerce but also by geopolitical factors and supply chain restocking activities, supporting elevated freight rates and high capacity utilization. This sector’s demand for speed and reliability has revolutionized logistics, with online retailing giants demanding same-day domestic delivery and 72-hour international shipping. Air cargo, being the fastest mode, is naturally suited for this challenge.

E-commerce now represents a substantial and continuously growing portion of air cargo volumes, estimated at up to 15% in December 2019, with accelerated growth during and after the COVID-19 pandemic. Approximately 80% of cross-border e-commerce goods are transported by air. This sector’s willingness to pay premium rates consumes available capacity and simultaneously increases overall market rates. The influx of large online marketplaces executing direct-to-consumer fulfillment strategies, particularly from China, has elbowed out more traditional freight and influenced the upward move in yields. Despite market softening, the sustained e-commerce demand is a key factor bolstering yields, which are still expected to remain 30% above pre-pandemic levels.

Technological Advancements and Automation

Technological advancements, particularly in artificial intelligence (AI) and automation, are profoundly reshaping the broader logistics and supply chain industry, with direct implications for air freight efficiency and competitiveness. The global AI in logistics market has experienced explosive growth, reaching $20.8 billion in 2025, representing a staggering 45.6% Compound Annual Growth Rate (CAGR) from 2020. Similarly, the warehouse automation market is valued at $29.9 billion, with a projected CAGR of 16.2%.

A wave of Mergers and Acquisitions (M&A) is reshaping the industry, as leading contract logistics providers such as GXO, DHL, CEVA, and Amazon acquire robotics and automation capabilities. These acquisitions are driven by the need to improve efficiency, scalability, and competitiveness. The listing of Geek+, a global leader in warehouse robotics, on the HKEX in July 2025, further indicates strong investor confidence in the future of warehouse automation.

While the provided research primarily details the impact of AI and automation on the broader logistics and contract logistics market, the principles of improved efficiency, reduced labor dependence, and enhanced scalability are directly applicable to air freight operations. For instance, advanced logistics management software and real-time tracking, enabled by these technologies, make express services more efficient and reliable. Shippers are increasingly leveraging these technological advancements to adapt to market fluctuations and capacity changes, optimizing their contract preferences and shipment strategies in response to evolving supply chain dynamics. The air cargo industry’s ability to capture online retail volumes and drive efficiency and sustainability in operations is critically dependent on accelerating digitalization, adopting new technologies, and adhering to operational standards. The full impact of automation and AI on reducing labor needs in certain supply chain areas, such as picking and packing in warehouses, is longer term, but companies are already using technology to offset labor shortages and improve productivity per worker.

Long-Term Outlook (Beyond 2025)

Despite the current deceleration, the long-term outlook for the air freight industry remains positive, driven by fundamental economic trends and the continued expansion of e-commerce. Boeing’s 2024 World Air Cargo Forecast (WACF) projects sustained growth in air cargo traffic, forecasting a 4% annual increase through 2043. According to the International Air Transport Association, industry data also supports expectations of steady growth in global air cargo volumes and capacity over the coming decades. This long-term growth is primarily driven by the expansion of emerging markets and the surge in e-commerce. Boeing anticipates a substantial increase in the global air cargo fleet, from 2,340 freighters in 2023 to 3,900 by 2043. Large widebody freighters, particularly in high-growth Asian markets, are expected to nearly double in number. Nearly half of production and conversion deliveries will focus on replacing older, less efficient freighters with more capable models.

Regionally, East and South Asian markets are projected to experience the highest traffic growth rates, fueled by expanding economies and rising consumer demand. The Asia-Pacific region is expected to see the most significant fleet expansion, with a nearly threefold increase. North America will also experience substantial growth, with both regions accounting for over two-thirds of global deliveries. India’s domestic air cargo market is poised to quadruple due to the expansion of express and e-commerce networks. Express carriers are projected to serve one-quarter of the air cargo market by 2043, up from the current 18%, highlighting their crucial role in e-commerce distribution and the expansion of express networks in emerging markets.

The global economy, however, faces substantial headwinds. The World Bank expects global growth to average just 2.5% in the 2020s, the slowest pace of any decade since the 1960s. This is largely due to increased trade tensions and heightened global policy uncertainty. The IMF projects global growth at 3.0% for 2025 and 3.1% in 2026, an upward revision from earlier forecasts, reflecting factors such as front-loading ahead of tariffs, lower effective tariff rates, better financial conditions, and fiscal expansion in some major jurisdictions. Despite these long-term growth projections, the air freight market will need to contend with the shifting economic landscape and external factors such as geopolitical tensions and trade policies, which will remain critical variables to watch.

Conclusions

The economic outlook for the air freight industry in 2025 is characterized by a significant slowdown in demand growth, particularly in the latter half of the first semester, largely driven by the unwinding of “front-loading” effects and the pervasive impact of trade protectionism. While overall air cargo demand grew by 3% in H1 2025, June saw a sharp deceleration to just 0.8% YoY, with key lanes like Asia-North America experiencing significant contraction due to US trade measures and the removal of the de minimis exemption. This highlights the acute sensitivity of the air freight market to political decisions and trade policy shifts, which can rapidly reconfigure global trade flows and introduce substantial volatility.

Despite the softening demand and declining spot rates resulting from capacity outpacing demand, cargo yields are expected to remain approximately 30% above pre-pandemic levels, a new baseline largely sustained by robust e-commerce demand. This indicates a market correction from an extraordinary peak rather than a complete return to historical low profitability. However, the increasing competitiveness from declining ocean freight rates poses a challenge to maintaining this yield premium.

Overall airline profitability is projected to strengthen slightly in 2025, driven by lower jet fuel prices. Yet, this benefit is significantly offset by escalating labor costs and persistent supply chain issues, particularly aircraft delivery backlogs, which limit fleet modernization and growth. The industry’s thin profit margins underscore its vulnerability to external shocks, new taxes, or regulatory burdens.

In conclusion, the air freight industry demonstrates remarkable resilience and adaptability in navigating a tumultuous global economic environment. Its ability to reconfigure trade lanes and leverage the sustained growth of e-commerce showcases its strategic importance. However, stakeholders must remain agile, continuously monitoring geopolitical developments and trade policy changes, and prioritizing cost control and technological adoption to maintain profitability and capitalize on long-term growth opportunities, especially in emerging markets and the express segment.