News #120 - Air freight: growth is slowing down

11.07.2025

Global air cargo traffic growth continued to soften in May 2025, reflecting mounting pressure from shifting trade dynamics—particularly the escalation of tariff-related disruptions. The latest data reveals a significant deceleration compared to previous months, highlighting growing vulnerability in key corridors such as Asia–North America.

1. Supply and Demand Dynamics: May 2025 Performance Overview

According to the International Air Transport Association (IATA), global air cargo volumes, measured in cargo tonne-kilometres (CTK), rose by just 2.2% year-on-year in May—marking a substantial slowdown from +5.8% in April. On a seasonally adjusted basis, monthly volumes declined by 1%. Based on estimates, total CTK reached approximately 22.7 billion tonne-kilometres during the month.

This deceleration reflects the waning effect of frontloaded shipments, which had previously surged in anticipation of impending tariff hikes. Additionally, the removal of the de minimis tariff exemption for shipments under USD 800—many of which were transported by air—has had a disproportionately negative effect on air cargo volumes.

Impact on U.S.-Related Flows

Air cargo flows to and from the United States registered a marked decline:

North American carriers saw a 5.8% year-on-year decrease in traffic and a 10% month-on-month drop.

The Asia–North America corridor experienced a dramatic 10.7% decline YoY, following the termination of the de minimis exemption on May 2, 2025. This represented a 12.3 percentage point drop relative to April.

Asia–Europe and Middle Eastern Corridors

In contrast:

The Asia–Europe trade lane reported a strong 13.4% YoY increase and a 2.3-point gain versus April. This likely reflects a strategic redirection of trade flows away from the U.S. market.

Routes connecting the Middle East to Europe and Asia each saw 3.9 percentage point increases month-on-month, underlining the region’s growing significance as a global logistics hub.

Intra-Asia and Asia–Africa Corridors

Intra-Asian flows remained robust, growing by 9.1% YoY, though a 0.8-point decline was observed month-on-month.

The Asia–Africa corridor failed to sustain April’s rebound, with traffic falling 14.6% YoY and declining 6.2 percentage points compared to April.

Cumulative Traffic: January to May 2025

Despite May’s moderation, earlier rebounds in March and April ensured that year-to-date traffic remains positive. The growth in volumes continues to align with capacity expansion, signaling temporary resilience in the face of broader economic headwinds.

2. Capacity Trends

Global air cargo capacity grew by 2% YoY in May and 2.6% on international routes, reaching a new historical high of 52.6 billion tonne-kilometres.

This growth was primarily driven by:

A 5.8% YoY increase in bellyhold capacity on passenger aircraft, supported by expanded summer flight schedules.
A 5.5% MoM rise in bellyhold space in May alone.

Conversely:

Capacity aboard dedicated freighters declined by 1.2% YoY and 3.8% MoM, reflecting airlines’ tactical responses to reduced demand—notably along the Asia–North America corridor.

3. Pricing Trends and Fuel Costs

Jet fuel prices declined by 18.8% YoY and 4.3% MoM in May, marking the fourth consecutive monthly drop. These cost reductions, alongside diminished demand on transpacific routes, placed downward pressure on freight yields, which fell:

2.9% YoY
3.7% MoM

However, data from the Upply Freight Index indicated:

Rate resilience on the Europe–North American East Coast corridor, likely due to advance purchasing activity amid tariff uncertainty.

Moderated rate declines on the Asia–Europe corridor, which remains relatively buoyant in terms of volume demand.

4. Forward Outlook: Indicators of a Broader Slowdown

May’s performance may foreshadow a broader cooling in the air cargo industry for the remainder of 2025. In its June 3 economic update, the OECD revised its 2025 global GDP growth forecast downward by 0.2 percentage points, to +2.9%, following +3.3% growth in 2024.

The OECD further noted:

“Growth through 2025 is expected to be especially weak, with global output rising by just over 2.5% by Q4, and by only 1.1% in the United States. Global trade growth is likely to slow substantially over the next two years, after significant front-loading ahead of expected tariff increases.”

Manufacturing indicators already reflect this weakening trend:

The Global Manufacturing Purchasing Managers’ Index (PMI) fell to 49.1 in May—below the expansion threshold of 50—marking a 6.9% YoY decline and a 2.8% drop MoM.

Given the tight correlation between industrial production and air cargo, the implications for freight volumes are significant.

The World Trade Organization (WTO) also echoed a cautious tone in its latest Trade Barometer. While trade activity rose earlier this year due to precautionary purchasing, the New Export Orders Index fell below its benchmark of 100 to 97.9, signaling weaker trade momentum in the months ahead.

Conclusion

The global air freight market is exhibiting early signs of structural adjustment, shaped by the convergence of macroeconomic deceleration, tariff realignments, and shifting supply chain strategies. While some corridors—such as Asia–Europe and Middle East routes—are demonstrating resilience, others, notably Asia–North America, are experiencing significant demand erosion.

The industry’s ability to adapt—through agile capacity management and strategic routing—will be critical in navigating the complexities ahead. Stakeholders should prepare for a more subdued, policy-sensitive market environment as 2025 unfolds.

Source: https://market-insights.upply.com/en/air-freight-growth-is-slowing-down

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