August's Global Air Cargo Paradox: Demand Rose 5% Despite Economic Instability

According to Xeneta, global air cargo demand continued to rise by 5% year-over-year in August 2025, but this is a result of economic uncertainty rather than inherent strength, as spot rates continue to fall.

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Air Cargo (Photo: Shutterstock-Phaata)

A surprise summer of growth for global air cargo volumes showed no sign of abating in August, with demand rising +5% year-over-year for the second consecutive month. However, industry analysts from Xeneta suggest falling spot rates may be a clearer indicator of the market’s outlook as shippers, airlines, and forwarders continue to grapple with economic uncertainty.

Although cargo volumes rose, alongside a similar +4% YoY growth in offered capacity, the average global spot rate fell for the fourth consecutive month, dropping -3% to $2.55/kg. And, according to Niall van de Wouw, Xeneta’s Chief Airfreight Officer, it is these rates that may signal a challenging few months ahead for the market.

This decline could be even more profound when factoring in currency effects, trade flow shifts, and falling jet fuel prices.

“It is often said that airfreight is a bellwether for macroeconomics, but I don’t think it is at the moment,” he said.

“We’ve now reported +5% growth in demand for July and August and it would be easy to take some comfort from these volumes were it not for the current market conditions. Right now, volumes are certainly not as bad as people feared, but also not as good as people hoped. In our April data, on the back on the U.S. administration’s ‘Liberation Day’ tariffs announcement, we asked ‘how bad will it get?’ for air cargo demand. We still cannot answer that question,” added van de Wouw.

Three Main Shipper Groups are Dominating the Market

“More than ever, shippers are falling into three categories right now,” said Niall van de Wouw. “There are those who will always say ‘no way’ to airfreight because their products simply cannot justify the higher cost of air versus ocean freight. Then there are traditional air cargo customers who always ship goods by air because of its speed and value for their high-priced or more perishable or time-sensitive products. Between these two views sits a bigger group of shippers who will use ocean to move their goods if they can, and airfreight if they must. It is this segment of the market which is driving the upturn in airfreight demand we are seeing.”

“Air cargo’s higher demand remains the result of mode shift we saw in July, with a bit of support from e-commerce. It is not an indicator of increased economic activity. It’s just that airfreight is getting a bigger share,” he continued.

“Many shippers looking to lessen the impact of tariffs just do not know how the market will look in 3-4 weeks’ time because of the lack of clarity. Consequently, I think more businesses are deciding to take a hit and move their products by air – but this good news for the air cargo market remains under constant review. Overall, it’s hard to see where strong, sustainable airfreight growth will come from,” he said. “One forwarder I spoke to this week said that while air shipments related to AI are one of the few verticals showing a little bit of growth, they had far lower expectations for big and typically regular airfreight users like automotive, pharmaceuticals, and high-tech. I think this sentiment will resonate with a lot of other companies.”

Widespread Downward Pressure on Rates

Whether driven by front-loading, fears over the financial impact of tariffs, or circumvention efforts, there’s no doubt this summer’s surprise airfreight demand growth is founded on the unpredictable nature of world trade – but the pressure on freight rates is mounting.

The downward trend in global spot rates was recorded across most major air corridors. In August, rates from Southeast Asia to North America and Europe were down by more than -20% YoY. The Northeast Asia trade performed more stably, while the Transatlantic remained the only bright spot with a +5% YoY increase, but has slowed considerably since July.

Can E-Commerce 'Save' the Market?

The rise of Chinese e-commerce giants "rescued" the airfreight market at the end of 2023 and sustained its growth throughout 2024. However, the U.S. elimination of the de minimis threshold could have a profound impact on the 2025 "peak season."

“A lot of people think of de minimis as being about B2C, but the de minimis changes now in effect are also a big thing for B2B into the U.S. and we are already seeing some SME businesses reacting to, and challenging, this impact,” van de Wouw believes.

“The starting point for closing the de minimis threshold was mainly politically motivated against the big Chinese ecommerce platforms. But the widening of this legislation is levelling the playing field again for all e-commerce shipments entering the U.S, and I would now expect to see lower e-commerce volumes moving by air from Europe to the U.S. If anything, observers suggest this will now benefit China because of its lower production cost base.”
“So, I see this having a bigger impact on B2B business and less on B2C. It adds another barrier of administrative procedures, and cost to the supply chain,” he affirmed.

The Big Question Remains Unanswered

“In terms of disruption to world trade, the uncertainly seems set to remain with so many questions unanswered,” said van de Wouw. “What has been formalised and what hasn’t? What will the removal of de minimis mean for cross-border e-commerce? And the biggest question still – how bad is it going to get? The predictions are concerning but, because of all the uncertainly, the hurt for airfreight has been softened and delayed. But, for how much longer is anyone’s guess.”

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