Airfreight has reached a tipping point when it comes to benefitting from the Red Sea crisis, while e-commerce is exacerbating trade lane imbalances.
These were some of the key observations made by air cargo experts taking part in a Flexport webinar this week.
Xeneta chief airfreight officer Niall van de Wouw said during the ‘Flexport Air Market Predictions for 2025’ webinar that continued ocean freight disruptions due to the Red Sea crisis are expected to continue to benefit airfreight rates and volumes, but the extent of this is expected to change.
He said: “We think the Red Sea situation has plateaued. The boost that’s given to airfreight has reached its peak. It might even go down a little bit. “
He stressed that if the Red Sea situation gets resolved or a safe passage is established then “there’s ample capacity to move goods around” in ocean shipping.
That said, he also pointed out that if airfreight does lose some of the Red Sea business boost it is currently experiencing, then potential US east coast port strikes from January may again serve to boost airfreight.
Adriaan den Heijer, executive vice president cargo at Air France KLM and managing director Martinair, also stated that e-commerce is exacerbating trade lane imbalances and this is another challenge for next year.
He reflected that e-commerce growth could lead to “even more trade imbalances” due to demand on trade lanes out of Asia, compared to Europe or North America.
He noted that a lot of global freighter capacity has moved to Asia, China and surrounding areas specifically, due to e-commerce demand.
Freighter capacity is being moved to China from Africa, while some is also being move from South America.
“It looks like this is not enough," den Heijer stated. He added that the shift "means that automatically we generate shortages in other continents also".
He further explained: “And that’s shortages that we cannot complement with belly capacity because that belly capacity is not enough and not always flying to the right places.”
Airlines have been re-evaluating China to EU passenger flights and European carriers are shifting belly capacity away from China, India and southeast Asia into the Americas, according to Flexport’s observations.
Air France KLM itself has reduced capacity to Beijing and Shanghai due to the additional costs of longer flight times to avoid Russian airspace.
The Atlantic, North and South America are able to absorb passenger demand, the airline has observed.
However, den Heijer noted: “The belly additions in North and South America are not always to key trade lanes from a cargo perspective.”
Air France KLM has instead had to make use of regional feeders into major airports and said it expects these regional freighter and belly distribution patterns to continue into 2025.
Van de Wouw added that if e-commerce growth wasn’t in the mix then the airfreight market would look very different.
“If we look at the double digit growth that we see in 2024, if you would take out the impact of the Red Sea and e-commerce, there’s a very small percentage remaining that’s built upon traditional B2B airfreight. And that is only this year surpassing 2019 levels."
E-commerce is also overshadowing issues with other verticals that need to be monitored, den Heijer further added. “There are some sectors where the volumes are going down significantly like automotive," he said. Air France KLM has also seen a lot of “pharma gone from air to sea”.
Expected growth
Thomas Kempf, senior director of business airfreight development at Flexport, said that overall higher demand than capacity is expected next year due to the ageing freighter fleet, fleet delivery delays and service disruptions, some of which are a result of various geopolitical conflicts.
“We can expect demand to grow anything around 4-5%, while capacity growth will be less than that,” said Kempf.
Millena Millenkovic, regional airfreight manager, Benelux, Flexport said that US-China tensions over tariffs and e-commerce, the continued Russia-Ukraine conflict and Middle East instability - that may disrupt logistics hubs like Dubai - are “creating new barriers to global trade”.
Additionally, she stressed that labour strikes could put pressure on airfreight demand and capacity and extend transit times, with prolonged strikes disrupting supply chains and resulting in inventory shortages, as well as seasonal surges.
“All of this is straining airfreight capacity and inevitably impacting rates,” she said.
https://www.aircargonews.net/business/supply-chains/tariffs-and-trade-barriers-top-supply-chain-leaders-concerns-for-2025/
