Growing demand could drive up air freight costs by 2025

Growing demand could drive up air freight costs by 2025

According to Xeneta’s aviation market outlook report, air freight demand is expected to grow strongly in 2025 (4-6%), while capacity is expected to grow more slowly (only 3-4%). This could lead to a shortage of supply and leave shippers facing the possibility of further increases in shipping costs.

The main reasons for this problem could come from:

• The growth of e-commerce: Expected to grow 14% annually through 2026, boosting demand for freight.

• Semiconductor production growth: The amount of silicon wafers – a basic material used to make semiconductors and related electronics – is expected to increase by about 10% in 2025, after falling by 2% in 2024.

• Potential strikes at US East and Gulf coast container ports in January could also cause congestion, reduce schedule reliability and lead to a shift from sea to air cargo.

However, Aviation director Niall Van De Vouw and analyst Wenwen Zhang of Xeneta also warn of factors that could slow demand growth, including:

• Increased regulatory scrutiny of e-commerce from major countries such as the US, EU and Indonesia.

• The surge in air cargo volumes related to the Red Sea crisis has leveled off and could even decline slightly next year – although this comes with the potential for further disruptions due to the current geopolitical situation.

“The 2024 aviation market shortage is unlikely to ease in 2025,” also said by analyst Wenwen Zhang. “Businesses should be prepared that their shipping costs will likely be higher next year.”

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