Airlines slash cargo forecasts amid escalating trade war

IATA has slashed its 2025 air cargo growth forecast due to the escalating trade war, warning of a decline in cargo revenue and volumes, despite positive industry-wide profits.

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International Air transport

The International Air Transport Association (IATA) on Monday revised down its forecasts for air cargo volumes and airline revenues, as global tariffs imposed by the US government disrupt the air transport market.

The association said air cargo demand is now forecast to grow just 0.7% year-on-year, with member airlines expected to transport 76 million U.S. tons, down from a forecast of 80 million tons in December. Air cargo volumes are expected to grow 12% in 2024, a record high, based on an average of data from various sources. Six months ago, IATA predicted that both passenger and cargo volumes would grow 5.8% this year. The U.S.’s repeal of the de minimis exemption — which allowed parcels worth less than $800 to enter the country without incurring duties or complicated customs procedures — for goods from China and Hong Kong is also putting downward pressure on cargo volumes. That’s because e-commerce retailers are shifting from shipping directly to consumers to fulfilling orders from warehouses in the United States, which are supplied by lower-cost ocean freight.

IATA said its member airlines’ cargo revenue is expected to fall 4.7% to $142 billion, as global economic growth slows amid rising tariffs and other protectionist policies that tend to restrict cross-border trade. IATA’s December forecast called for $157 billion in cargo revenue. Cargo yields are also expected to fall 5.2%, reflecting a combination of slower demand growth and lower oil prices. When jet fuel prices rise, airlines typically impose fuel surcharges, which often add to their profit margins.

New estimates suggest the air cargo market could see a sharp decline in the second half of the year, potentially wiping out the usual peak season. IATA recently reported that cargo demand remains strong, rising 5.8% year-over-year in April. According to IATA data, cargo traffic (which includes distance in addition to tonnage) rose 2.4% year-over-year in the first quarter. Analysts say the year-to-date growth is largely due to businesses placing early orders with foreign suppliers to import goods before the tariffs were announced. This is similar to what happened when shippers anticipated sweeping tariffs from the Trump administration before they were officially implemented in early April. After the White House paused tariffs for 90 days to spur negotiations and reduced tariffs on Chinese goods to 30%, ocean and air freight volumes into the United States rebounded as importers stocked up on goods before tariffs were raised again.

Many countries have retaliated against US tariffs or plan to do so when US tariffs resume next month.

Across both passenger and cargo, airlines are expected to post modest gains, with total revenue up 1.3% while total costs rose 1%. Strong employment and subdued inflation are expected to sustain passenger demand, but at a slower pace than previously estimated.

Airline revenue is now forecast at $979 billion in 2025, down from the $1 trillion estimated in December. Net profit of $36 billion was also revised down from $36.6 billion six months ago, resulting in a net profit margin of 3.7%.

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