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The airfreight market is facing a bumpy ride in 2025 as geopolitical developments are set to take their toll on the market but e-commerce and lower inflation are likely to support growth, according to Denmark-based freight forwarder Scan Global Logistics (SGL).
In a market outlook, the forwarder said that volatility within the airfreight market is likely to persist this year but overall the industry is still expected to post volume growth.
SGL said that demand grew by double-digit levels last year and while this is not on the card this year, “the expectation remains that demand will be healthy, sustaining elevated freight rate levels”.
One development that has the potential to have a negative impact on airfreight is the halt of attacks on containerships in the Red Sea.
“Many retailers have opted to prioritise airfreight for certain product categories to meet consumer demand amidst prolonged ocean transit times,” SGL said.
A modal shift back to ocean could therefore take place when – or if – ocean shipping services eventually return to transiting the Suez Canal.
Another trend that could have a negative impact on airfreight demand is the introduction of tariffs by the new Trump administration in the US, although SGL adds that the reverse could also be true.
“Trade and tariff wars can potentially impact trading patterns, especially for North American trade lanes,” the forwarder explained.
“On the other hand, the new US administration is considered ‘business-friendly’, which can further fuel airfreight growth.”
E-commerce has been one of the trends fuelling growth in the use of air cargo due to the need for fast delivery times and SGL suggests there is further room for development.
“The latest emergence of ‘social commerce’, with TikTok and Instagram venturing into commerce, will further accelerate this development,” the forwarder said.
“Consumers are increasingly abandoning physical stores in favour of shopping from the couch at home, driving retailers to focus on the flagship store concept only.”
SGL also pointed to a recent report from Xeneta which suggested that GDP growth would be “flattish” but easing inflation would support increased consumer spending and as a result air cargo demand.
Xeneta also supports the idea that e-commerce will help fuel demand growth in air cargo.
On the capacity front, there are not expected to be any immediate space shortages as factories in China shutdown for the Lunar New Year holiday between 15 January and 5 February.
However, the situation could change once the holiday comes to an end an factories re-open and high demand for semiconductors and Artificial Intelligence components ramps up.
“Overall, the coming weeks are expected to be calmer than seen in a long time,” SGL said, adding: “The overall consensus remains that 2025 could spell yet another turbulent year for the airfreight industry.”
Another trend that could impact the market in terms of costs is the introduction of mandatory Sustainable Aviation Fuel (SAF) blending quotas.
The European Union (EU) has implemented a mandatory 2% SAF blending quota for all flights departing from EU countries starting January 1, 2025.
The mandate begins at 2% in 2025 but increases to 6% in 2030, 20% in 2035 and 70% by 2050.
“Similar initiatives are expected by other countries outside in the years to come, with India, Singapore, and Japan having indicated similar measures effective 2026 and onwards,” SGL claimed.
