As global supply chains adjust to post-pandemic realities and shifting trade dynamics, the air cargo industry in the Asia-Pacific (APAC) region finds itself at a pivotal crossroads.
Historically the fastest-growing airfreight market, APAC carriers now face evolving challenges including fluctuating e-commerce flows, increasing competition from Middle Eastern and North American operators, and changing capacity dynamics. Recent annual results from major carriers—Cathay Cargo, Singapore Airlines Cargo, Korean Air Cargo, and China Southern Cargo—reveal both opportunities and risks that lie ahead.
E-commerce continues to drive air cargo demand across APAC, particularly in cross-border express shipments from China, Hong Kong, and Southeast Asia. Cathay Cargo reported an 11% increase in cargo tonnage in 2024, with the second half of the year seeing significant growth driven by e-commerce. However, the pace of growth is moderating as freight forwarders delay contract commitments and retailers reassess inventory strategies.
Key trends influencing e-commerce-driven air cargo include:
Freight forwarders postponing Block Space Agreements (BSAs) amid concerns over rate volatility.
Shippers redirecting cargo flows from China to Southeast Asia to mitigate tariff risks.
A more cautious market sentiment compared to the aggressive expansion seen in previous years.
Singapore Airlines Cargo has reported stable volumes but faces tightening margins due to increased competition in the e-commerce logistics sector. Similarly, Korean Air Cargo and China Southern Cargo are monitoring trade pattern shifts as they adapt their network planning.
One of the most pressing challenges for APAC airlines is determining the optimal balance between freighter operations and belly cargo capacity. During the pandemic, freighters provided reliable revenue streams as passenger flights were grounded. Now, with the resurgence of international travel, airlines must reassess their strategies.
Cathay Cargo continues to operate a dedicated freighter fleet while integrating more belly cargo into its network.
Korean Air Cargo is expanding its freighter fleet, particularly with Boeing 777Fs, to maintain focus on long-haul markets.
China Southern Cargo is refining its approach by shifting away from freighter-heavy routes and optimizing combined capacity utilization.
The return of passenger aircraft has increased belly capacity faster than demand, softening yields and intensifying competition. Cathay Cargo's 2024 report noted that cargo yields were only 3% higher than pre-pandemic levels, reflecting growing market pressures and the normalization of pricing structures. Maintaining profitability in freighter operations while fully utilizing belly capacity will be critical for APAC carriers.
Geopolitical factors and trade tensions are reshaping cargo flows within the region. While China remains the largest driver of air cargo volumes, supply chain diversification and shifting trade policies are prompting airlines to reallocate capacity and explore alternative routes.
Key developments include:
Delays in contract negotiations due to tariff uncertainty.
Capacity adjustments by carriers, with flights shifting from China to hubs in Vietnam, Thailand, and Indonesia.
Freight forwarders adopting flexible agreements to hedge against trade risks.
Airlines must maintain adaptability to ensure their networks align with the evolving trade landscape.
While cargo demand remains relatively strong, APAC carriers face mounting cost pressures. Rising labor costs, fluctuating fuel prices, and stricter sustainability regulations are increasing operational expenses.
Cathay Cargo achieved a 4.5% reduction in cost per available tonne-kilometer (ATK) in 2024, showcasing efforts to enhance cost efficiency.
Singapore Airlines Cargo and Korean Air Cargo are investing in Sustainable Aviation Fuel (SAF) and emissions reduction initiatives to align with global decarbonization goals.
Balancing profitability with sustainability will be a key differentiator as airlines adapt to evolving industry priorities.
The APAC air cargo market is at a turning point, presenting both significant challenges and opportunities. Major players such as Cathay Cargo, Singapore Airlines Cargo, Korean Air Cargo, and China Southern Cargo are recalibrating their strategies to navigate an increasingly complex landscape.
Key factors shaping the future include:
The resurgence of belly cargo capacity, increasing competition and compressing yields.
Trade tensions and supply chain shifts, driving new cargo flows and expanding Southeast Asia's role in the logistics network.
Sustainability mandates, requiring investment in greener operations and fuel-efficient technologies.
The ability of APAC airlines to remain agile, innovative, and efficient will define their success in this evolving market.
Source: https://aircargoweek.com/growth-challenges-and-market-shifts-in-2025/
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