IATA does not expect to lower its air cargo demand forecast when ocean shipping eventually returns to the Red Sea.
The trade body confirmed in its Sustainability and Economic Outlook during the Plenary Session that it expected a 6% growth in air cargo volumes in 2025.
Speaking to Air Cargo News at the IATA World Cargo Symposium (WCS), IATA director general Willie Walsh said that the trade body believes the air cargo industry can well withstand the return of ocean shipping to the Red Sea, even though the prospect of such a return does seem a long way off.
Reflecting on the impact on air cargo, Walsh said: “I don’t think it will be significant.”
This is because of the core demand from time-sensitive markets that airfreight serves.
“What we tend to transport by air is critical in terms of time or critical in terms of value. And those goods tend to stick with air rather than move to transport by ship, so just-in-time products will invariably move by air.”
IATA predicted in December that air cargo volumes, measured in cargo tonne-kilometers (CTK), would rise by 5.8% year on year to reach 72.5m tonnes in 2025, supported by e-commerce and Red Sea-related demand.
And following the beginning of the Red Sea crisis and the rerouting of ships around the Cape of Good Hope in Africa, a number of companies have reported additional airfreight or sea-air demand from shippers that would traditionally use ocean shipping services.
But when the recent ceasfire between Israel and Hamas was announced - leading Hamas supporting Houthi rebels to cease attacks on commercial shipping in the Red Sea - there was debate in the industry about how quickly ships would return to the Red Sea and whether airfreight would suffer as a result of shippers switching back to their normal transport mode.
Some suggested that the effort required from shipping lines and shippers to re-adjust to the Red Sea/Suez Canal route meant they would want long-term certainty that attacks would not restart.
And the ceasefire has since ended, a blow to hopes of a return to the Suez Canal for commercial shipping.
Any shift from air back to sea “is very marginal”, according to Walsh. In fact, volumes are less significant than yields in the scenario that disrupted oceanfreight goods shifts to airfreight because it has become time critical.
“What we typically see is rather than the volumes, (sea to air) drives the yields because pricing will tend to go up because the supply of options for moving cargo gets reduced when you get this disruption by sea.”
E-commerce – the other driver of air cargo growth mentioned by IATA in December – is also stable because the immediacy that consumers have come to expect fits well with airfreight.
The major risk here is with US de minimis changes, reflected Walsh.
“There’s been a significant increase in e-commerce trade. And I don’t think that’s going to be disrupted too much. The issue with the US de minimis removal or adjustment – that clearly may have an impact because of the amount of goods that get shipped from China to the US that are not below the de minimis regulation.”
As to the potential impact of tariffs and other geopolitical issues on volumes, he says “it’s impossible to know”, but said a surge in shipments would be more likely than a longer term change in volumes.
“What we have seen in air cargo before is a spike when people announce tariffs then you get some good being shipped in advance of the tariff coming into effect – as you would expect. And it’s been in both directions, not just ex China. For example, we have seen a spike in cosmetics shipments from the US to China.
“We’ve not really seen that happen before. I think when you look through it all it’s not going to represent a big change in the overall volume or value of goods being shipped. It’s just timing of the shipping and some people will accelerate the timing to try and avoid the tariff impact.
Further reiterating air cargo’s prospects, Walsh highlighted that between 2010 and 2019, a period of relative calm, cargo on average represented 13% of the industry’s revenues.
“This year we’re forecasting cargo revenue at 15.6%. So it’s ahead of the long-term average.
“It shows you that it’s a very important part of the industry. Particularly when you consider that net margins are only 3.7%.”
He added: “It’s clearly lower than what it was in 2022 when it peaked, but that was more of a reflection of the fact that passenger revenues had collapsed.”
The next air cargo demand forecast will be issued in the IATA AGM at the beginning of June.
