The global air cargo market is approaching a major transformation. Air freight rates are expected to climb steadily over the next few months. Analysts project that these elevated rates will persist through 2025, driven by a variety of economic and logistical factors. As businesses worldwide grapple with shifting demand dynamics, the outlook for air freight remains a hot topic in logistics circles.

Rising Air Freight Rates: What’s Driving the Surge?

Several interconnected factors are contributing to the upward pressure on air freight rates:

1. High Airfreight Demand: The post-pandemic recovery has fueled a surge in demand for expedited shipping solutions. Many businesses have pivoted to meet e-commerce requirements. They are increasingly handling disrupted supply chains. These businesses are turning to air freight for faster delivery times. As a result, air cargo providers are seeing heightened interest from a range of industries.
2. Ocean Shipping Disruptions: Ongoing challenges in ocean freight are impacting the industry. Issues like port congestion, labor strikes, and shipping delays are significant factors. These challenges are pushing more companies to explore air cargo options. This mode shift adds further stress to an already constrained air freight market, leading to rising costs.
3. Capacity Shortages: Air freight carriers are experiencing a significant capacity crunch. United Cargo, for example, has reported record tonnage despite scaling up operations. This shortage is exacerbated by the lagging return of passenger belly space. It remains below pre-pandemic levels in many regions. This further tightens available cargo capacity.

Forecast and Optimism from Industry Leaders

Jan Krems, president of United Cargo, has expressed optimism about the air freight market’s future. According to Krems, the first quarter of 2025 will see a continuation of robust demand, outstripping supply growth. He forecasts a notable 20% increase in demand, contrasted with a more modest 4.4% rise in cargo capacity. This demand-supply imbalance will keep air freight rates elevated. Air freight rates stay high, especially in major trade lanes where competition for cargo space remains fierce.

Variable Trends Across Trade Lanes

While global average rates are expected to rise, the picture is more nuanced when examining specific trade lanes. Some routes, like North America to China, experience stable or even declining rates due to excess capacity. This variability highlights why strategic planning is crucial for companies reliant on cross-border trade. Not all lanes will be equally affected.

Concerns Over Trade Risks and Geopolitical Tensions

Geopolitical tensions are also influencing the air cargo market. Conflicts like the ongoing Red Sea crisis pose risks to trade flows and the stability of shipping routes. Such uncertainties will lead to sudden disruptions, impacting both air and ocean freight and causing unpredictable rate fluctuations.

Balancing Demand and Supply in a Complex Market

The air freight industry faces a complex set of challenges as it heads into 2025. With demand projected to outpace supply, capacity management will be critical. Shippers will need to navigate rate volatility, assess geopolitical risks, and improve their logistics strategies appropriately.

Overall, these dynamics show the delicate balancing act between air freight providers and global trade needs. Some routes gain from capacity surpluses. Yet, others will see sustained price increases. These trends shape the strategic priorities of logistics professionals around the world.