Air cargo remains a ‘shock absorber’ in turbulent trade

The world economy is facing intense challenges, largely because of continual fluctuations in tariff policies by the Trump Administration and their impact on supply and demand—despite the fact markets had begun to recalibrate following the global pandemic.Nevertheless, market analysts see the air cargo market stabilizing, but not growing at the same pace as previous years. Willie Walsh, director general of the International Air Transport Association (IATA), highlights this resilience against the backdrop of protectionist trade policies and tariff volatility.“As trade flows adapt to a protectionist U.S. tariff regime, air cargo has been the hero of global trade buoyed in part by robust e-commerce and semiconductor shipments to support the boom in AI investments,” says Walsh. “Notably, air cargo enabled front-loading to deliver products ahead of tariff deadlines, and it flexibly accommodated demand surges as tariffed goods normally destined for the U.S. found new markets.”IATA projects global air cargo volumes to increase by 2.4% year-over-year, reaching approximately 71.6 million tonnes in 2026. Cargo revenues are projected to rise 2.1% to $158 billion, up from $155 billion in 2025.IATA figures for year-on-year in October 2025 indicate that the Asia-North America trade lane contracted for the sixth month in a row, while there was double-digit or near double-digit growth within Asia, between the Middle East and Europe, and between Europe and Asia.“China-Europe is the significant change,” says Brendan Sullivan, IATA’s head of cargo prior to the organization’s World Cargo Symposium. “China is incredibly important, especially to e-commerce. Previously, many goods were going to the United States or via maritime. This is a new opportunity, but carriers must manage the risk.”WorldACD Market Data statistics show that global air cargo demand and prices had broadly stabilized in the third full week of 2026 after completing their recovery from the annual end-of-year slump, ahead of a brief expected further uplift in demand from Asia Pacific origins prior to the Lunar New Year period in the second half of February.The Middle East and South Asia (MESA) is one region of origin recording significant year-on-year tonnage growth since last July. That continued into 2026, reports WorldACD, including in week 4, in which ex-MESA tonnages were up by +10%, year-on-year, including a +11% rise to the U.S. and +7% increase to European markets.Despite higher tariffs imposed on India by the U.S. in the second half of 2025, the biggest origin market within that region, India, recorded strong year-on-year growth in tonnages to the U.S. in the final two months of 2025. And that growth continued into January, including a +15% year-on-year increase in week 4, says WorldACD.Asia-Pacific carriers are experiencing strong growth in 2025-2026, with cargo demand up 5.6% driven by e-commerce and regional manufacturing. For example, Cathay Pacific Cargo carried 10% more cargo in November 2025, according to the latest figures available. Available freight tonne kilometers (AFTKs) increased by 7% in the first 11 months of 2025—the total tonnage increased by 10% compared with the same period of 2024.“Our cargo business continued to record month-on-month and year-on-year growth in November, driven by solid exports from our home market and the Chinese Mainland, alongside growth across our Southeast Asia and South Asia, Middle East and Africa routes Cathay,” says Cathay Pacific’s chief customer and commercial officer Lavinia Lau. She added how Cathay Cargo saw a robust air cargo peak that continued into December.Carriers are addressing the demand by using underutilized fleet from the China-U.S. trade lane. But capacity is a challenge. IATA points out how freighter fleet utilization is almost at an all-time high, and supply chain issues, caused by mounting regulatory and geopolitical pressures, mean freight conversions have slowed.In addition, Boeing and Airbus, affected by engine shortages, are slow to deliver new freighters. Airbus has pushed delivery of its A350F from 2025 to the second half of 2027. Delivery of Boeing’s 777-8F is pushed to 2028 and the program is facing continued setbacks.Going forward, air cargo volumes are also expected to be affected by shrinking consumer buying power.Industry analyst Xeneta finds that global air cargo demand finished a tumultuous 2025 on a high with volumes up +6% year-on-year in December, but warns that flattening e-commerce shipments ex-China will create concern for airlines and forwarders reliant on consumers’ online buying sprees. A more regulated landscape being led by the U.S. and Europe, is contributing to pressure on e-commerce.Better-than-expected volumes over the last quarter of the year helped air cargo demand record +4% growth in chargeable weight year-on-year for 2025, reflecting many shippers’ willingness to shift away from other modes to the speed and reliability of air cargo during times of disruption and economic uncertainty.“Last year had something for everyone,” says Xeneta’s chief airfreight officer Niall van de Wouw, “with service providers benefitting from higher volumes than expected earlier in the year, and shippers gaining from lower rates in the second half of the year.”Having predicted up to +4% market demand growth for 2025, Xeneta sees a more cautious outlook for 2026, forecasting, like IATA, a slightly more modest +2-3% rise in volumes this year. Among key 2026 air cargo market trends are rate softening caused by capacity being projected to exceed demand. “This will lead to a downward pressure on airfreight spot rates,” says, van de Wouw.IATA’s December Global Outlook reports that air cargo demand will continue to grow, although at a slower pace than in 2025, reflecting the softening of global trade.“While trade growth may slow in 2026, air cargo is well-positioned to remain robust, benefiting from artificial intelligence, hardware-driven investment, growing demand for high-value, time-sensitive goods, and the structural shift toward e-commerce,” the report detailed. However, the association warns that protectionist trade policies are a concern to more rapid development.IATA finds that total industry revenue is expected to reach $158 billion. Although yields are expected to see a slight decrease (-0.5$ compared to 2025), they remain roughly 30% higher than pre-pandemic levels.IATA stresses that strong demand is expected to continue despite broader slowdowns in global trade. The associations also points to how air cargo carriers are adjusting to changing trade routes and the increased need for flexibility in response to shifting global trade patterns prompted by new and continuing changing tariff policies by the Trump Administration.