Air Cargo Bull Market: A Cooling Trend in 2025?

In recent years, the air cargo industry has witnessed a significant bull market, driven primarily by the surge in e-commerce and cross-border trade. However, industry experts are anticipating a cooling trend in the air cargo bull market by 2025, with a potential slowdown of up to 50% in growth rates. This article explores the factors contributing to this trend and the potential impact on the air cargo market.

The air cargo market's growth has been fueled by the exponential increase in e-commerce and cross-border trade, particularly during the pandemic. However, several factors are expected to contribute to a slowdown in growth by 2025. Firstly, the e-commerce market is becoming increasingly saturated, with governments implementing stricter customs regulations for low-value shipments. This could lead to a decrease in airfreight volumes, as sellers like Temu and Shein adjust their fulfillment models to ship products by ocean and distribute them from U.S. warehouses.

Additionally, the air cargo market faces challenges from increased capacity, including belly capacity and freighter retirements. According to Rotate's CEO, high yields and low fuel prices might delay freighter retirements, but this won't meet demand. Moreover, reduced passenger flights due to geopolitical factors, such as the closure of Russian airspace to Western carriers, could limit capacity between China and Europe.

Geopolitical factors, such as trade policies and international relations, will also influence the air cargo market in 2025. The incoming Trump Administration's announced intention to impose significant tariffs on its top trading partners has the potential to upend global supply chains and undermine consumer confidence. Volatile geopolitical factors and widespread tariffs could create headwinds for air cargo, as anticipated U.S. reforms of customs rules governing easy access to low-value parcel shipments could cause a drag on e-commerce flows from China.

To maintain profitability as e-commerce growth decelerates, air cargo carriers can adapt their strategies by focusing on improving efficiency, diversifying revenue streams, and leveraging data insights. By investing in advanced technologies like autonomous vehicles and artificial intelligence, carriers can optimize routing, reduce operational costs, and enhance overall efficiency. Diversifying revenue streams can be achieved by expanding services to include logistics and warehousing solutions, catering to the growing demand for omnichannel retail and reverse logistics. Leveraging data insights can help carriers anticipate market trends, optimize pricing, and identify new opportunities for growth.

In conclusion, the air cargo bull market is expected to cool by 2025, with a potential slowdown of up to 50% in growth rates. Factors such as the slowdown in e-commerce growth, increased capacity, and geopolitical dynamics will contribute to this trend. To navigate this changing landscape, air cargo carriers must adapt their strategies, focusing on efficiency, diversification, and data-driven insights. By doing so, carriers can maintain profitability and capitalize on emerging opportunities in the air cargo market.