News #128 - Air cargo grows again in August but outlook remains uncertain

August 2025 marked another month of unexpected growth for the global air cargo industry, with volumes continuing to outperform forecasts. However, despite positive figures, uncertainty still clouds the outlook for the remainder of the year.

According to the latest data from Xeneta, global air cargo demand rose by 5% year on year in August—the second consecutive month of growth at this level. The increase is believed to reflect a modal shift as shippers move goods by air rather than by sea in order to mitigate the potential impact of tariffs.

Meanwhile, available capacity grew by 4% year on year, while the dynamic load factor slipped slightly to 56%. Despite healthy demand, the average global spot rate fell 3% year on year to USD 2.55 per kg.

Xeneta noted that spot rate performance may provide a more accurate reflection of the underlying economic environment than volumes alone.

“Air cargo’s higher demand remains the result of modal shift we saw in July, with some additional support from e-commerce. It is not an indicator of stronger economic activity—airfreight is simply capturing a larger market share,” said Niall van de Wouw, Chief Airfreight Officer at Xeneta.

Shippers Facing Uncertainty

Many shippers remain cautious amid unpredictable market conditions.

“A lot of businesses simply do not know what the market will look like in three to four weeks because of the lack of clarity,” van de Wouw explained. “As a result, some are choosing to absorb higher costs and move goods by air. While this has temporarily supported the air cargo sector, sustainability of growth is questionable.”

He added:

“Because of all the uncertainty, the pain for airfreight has been softened and delayed. But for how long remains unclear.”

Xeneta also highlighted that the decline in spot prices could be sharper when adjusted for currency effects, with the US dollar having depreciated by 4% against major currencies over the past year.

On the positive side, a 7% drop in jet fuel prices has helped offset some cost pressures for carriers.

Regional Rate Trends

Xeneta’s figures reveal contrasting trends across major trade lanes:

Southeast Asia → North America and Europe: Spot rates fell 20% year on year, averaging USD 4.80/kg and USD 3.05/kg, respectively, as capacity constraints eased.

Northeast Asia → North America: Rates declined 8% year on year but remained stable compared with July, averaging USD 4.76/kg. Tight capacity management narrowed the pricing gap with Southeast Asia to less than USD 0.05/kg.

Northeast Asia → Europe: Spot rates held steady year on year at USD 4.01/kg, though they slipped 4% compared with July. This stability came at the expense of backhaul traffic, which saw a 13% year-on-year decline due to persistent trade imbalances.

Transatlantic (North America ↔ Europe): Rates increased 5% year on year to USD 1.82/kg, although both demand and rates weakened as the month progressed, influenced by European holiday slowdowns and the fading effect of frontloading driven by extended US tariff deadlines.

Policy Headwinds and Market Outlook

Looking ahead, US trade policy remains a key variable. The decision to end the de minimis exemption for low-value e-commerce goods at the end of August is expected to affect flows from Canada, the UK, and Mexico, with broader consequences for global e-commerce.

Van de Wouw emphasized that the measure impacts not only B2C flows but also B2B trade:

“Many think of de minimis as a consumer-driven issue, but the changes are also significant for B2B shipments into the US. Some SMEs are already reacting to the additional cost and compliance requirements.”

He added:

“The original target was large Chinese e-commerce platforms. However, the expansion of this legislation effectively levels the playing field for all e-commerce shipments into the US. Ironically, it could benefit China in the long run due to its lower production cost base.

The greater impact, however, will likely fall on B2B trade rather than B2C, as it introduces another layer of administrative procedures and costs into global supply chains.”

Conclusion

Air cargo demand continues to surprise on the upside, driven largely by modal shift and tariff-related uncertainty. Yet falling spot rates, declining export order indices, and changing trade policies highlight a fragile growth trajectory.

As businesses and carriers navigate an environment marked by volatility, shifting demand drivers, and regulatory headwinds, the sector’s resilience will depend less on temporary boosts from modal shifts and more on its ability to adapt to evolving global trade dynamics.

Source: https://www.aircargonews.net/data-news/air-cargo-grows-again-in-august-but-outlook-remains-uncertain/1080608.article

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