Air freight market cools slightly at start of 2025

Global air freight traffic increased for the 18th consecutive month in January 2025 but capacity increased faster than demand, pushing transport prices down.

1/ Supply and demand

• Traffic in January 2025

Global air freight traffic, measured in tonne-kilometres, increased 3.2% year on year in January 2025, according to figures from the International Air Transport Association (IATA). The increase was the 18th in consecutive months for the air freight sector but growth nevertheless slowed. Corrected for seasonal variations, demand increased 3.1% over the previous month, taking the global traffic total to 25 billion tonne-kilometres (tkm), according to our calculations.

International traffic alone grew 3.6% year on year but, here again, this was a lower growth rate than in previous months. Most regions and commercial routes showed only single-figure traffic growth, even if the trend nevertheless remain relatively positive.

* CTK : cargo tonne-kilometres – Data source  IATA

The arrival of the new Trump administration in the United States, with its announcements of major increases in customs tariffs, seems to have had a first effect on demand for air freight. In January, the Europe-North America corridor was the main driver of growth, with a 9.7% increase in traffic year on year, "possibly influenced by anticipatory shipping ahead of potential U.S. trade tariffs", according to the IATA.

Asia-North America routes, which represent the world's biggest air freight corridor, registered a 6.1% increase. Intra-Asia flows continued to show growth, with a 7.6% increase. Europe-Asia links, which represent the third biggest air freight corridor, showed a more modest 2.3% increase year on year.

Some corridors registered a reduction in traffic. Between Africa and Asia, traffic fell 26.1% year on year, while routes between the Middle East and Asia and the Middle East and Europe contracted 7.3% and 3% respectively. 

• Capacity

Available capacity, measured in tonne-kilometres, increased 6.8% year on year in January 2025, while capacity on international routes alone rose 7.3%. Corrected for seasonal variations, capacity increased 1.7% month on month. Total available capacity rose to 53 billion tonne-kilometres, which represents a new record for the month of January.

This growth was again driven by an increase in available capacity in the holds of passenger aircraft, which grew 10% in January year on year. Passenger aircraft holds represented 55.2% of capacity on international routes, compared to 53.9% a year ago. At the same time, capacity aboard cargo aircraft also increased, albeit only by 4.2%, making January the 10th consecutive month of growth in this category.

• Supply-demand balance changes direction

For the first time for several months, demand grew less rapidly than capacity, reducing the sector's load factor, which, at 43.9%, was 1.5 points down on January 2024. This was its lowest level since September 2023. The fall was a little greater in the international segment, where the load factor was down 1.7 points to 47.6%.

2/ Air freight rates 

Logically, the fact that capacity grew faster than demand led to a fall in freight rates, despite an 8.1% month-on-month increase in the average price of aircraft fuel, which was nevertheless down 11.2% year on year.

According to IATA data, yield, including surcharges, fell 9.9% month on month in January, compared to a reduction of just 0.4% in the preceding month. The reduction was the second in consecutive months.

Source: Upply Freight Index

Year on year, yield increased 7%, "continuing its YoY (year-on-year) growth for the eight consecutive months", according to IATA. The sector is benefiting, notably, from the growth in demand generated by the development of trans-border e-commerce.

The Asia-Europe corridor remains one of the drivers of this growth. Demand on this axis is being driven by e-commerce but also by disruption in the shipping sector. Despite calmer conditions in the Red Sea, the bulk of shipping companies still prefer to take the Cape of Good Hope route, considerably lengthening transit times. As a result, some shippers prefer to use air freight.

Year on year, we can see a small increase in yield on the Europe-North America corridor. Demand in this traditionally meagre post-Christmas period may have been stimulated by fears of trade wars

3/ Outlook

A number of economic factors suggest that the outlook for the air freight sector is favourable.

• From the cost point of view, the fall in fuel prices is good news for the airllines.
  
  
• From the demand point of view, e-commerce is continuing to thrive, while industrial production seems to offer encouraging prospects again. In January, the Purchasing Managers' Index (PMI) for manufacturing production went over the 50 mark, which is an indicator of growth. At 50.62, it was at its highest level since July 2024, marking a significant change of direction after the contraction seen in the previous month's index. Growth in manufacturing production is a key factor in increasing demand for the services of the air freight sector.

• World trade is moving into a period of major turbulence as a result of the new customs duties policy in the United States. Apart from the surcharges themselves, The administration's modus operandi, with announcements followed by postponements and attempts to exert pressure, is creating a climate of uncertainty which is prejudicial to business. In January, the PMI for new orders increased to 49.37, 1.22 points up on the previous month's score. "However," said IATA, "this growth spurt is tempered by the fact that export orders have remained below the 50-point mark for eight consecutive months, a trend that may be exacerbated by the protectionist policies of the new US administration, which could potentially stifle export growth in the coming months".
  
  
• Control of inflation remains a major issue in a number of leading economies. In the United States, the consumer price index (CPI) increased 3% year on year,"marking four consecutive months of growth and the largest increase in seven months", IATA said. In the 27-member European Union, the CPI also increased slightly to 2.8%, still well over its 2% target. In Japan, inflation in January reached its highest level since January 2023 at 4%, "fueled by rapid food price increases and high energy costs," according to IATA. Conversely, China emerged from a period of deflation to record a 0.5% increase in its CPI in January. "Seasonal factors, such as the Lunar New Year, boosted consumer spending and prices, while fresh produce prices also increased during the festive period," IATA noted. These uncertain inflation prospects, whether they point to increases or reductions, could create a feeling of anxiety. In the United States, in particular, the new Trump administration is fuelling fears of a fresh increase in inflation, which would in its turn affect the production price index.
  
  
• Finally, economic prospects for the current year generally indicate that growth will be modest.

The air freight industry is moving into 2025 on solid foundations, with yields which are still higher than they were before the pandemic. It should also be able to count on growth in world trade. However, the changes brought in by the new Trump administration, whether in trade policy or in the geopolitical sphere, could significantly affect air freight traffic.

Photo Credit: SCM Jeans, Getty Images