The air freight industry, Monday, received downscaled projections for cargo volume and income from the globally recognized International Air Transport Association (IATA). This stems from the ripple effects of increased global tariffs brought on by changes in U.S. administration. Estimations for air freight demand growth indicate a mere 0.7% increase from the previous year, with IATA predicting that its members will ship about 76 million U.S. tons as against the expected 80 million tons in earlier estimates from December.
In the year 2024, the industry saw record highs with a 12% growth in air cargo volume, aggregated from various data sources. Two quarters ago, optimistic forecasts from IATA suggested cargo volume growth of about 5.8% for this year for both passenger and dedicated freight airlines.
However, recent U.S. policies foreshadow a fully-fetching e-commerce environment. The revocation of the de minimis exemption for China and Hong Kong, a regulation allowing cargo worth under $800 easy, duty-free access into the country, has put added pressure on cargo volumes. E-commerce vendors are now altering their supply chain strategies – moving from direct-to-consumer deliveries to stocking U.S. warehouses via the less costly ocean freight system.
IATA forecasts a drop of 4.7% to $142 billion in revenue received from cargo for its member airlines, brought on by the declining growth rate of the global economy. The economic slowdown is entrained by the increase in protective tariffs and measures that hinder international trade, as stated by IATA.
Just six months ago, December projections had hopes pinned at income from cargo standing at a stable $157 billion. Currently, the cargo yield is also foreseen to dwindle by 5.2%, an effect of lower demand growth coupled with decreasing oil prices.
During periods of jet fuel price inflation, airlines conventionally introduce fuel surcharges which potentially provides an augmented profit margin over the cost. New predictions intimate a significant downturn in the air cargo market, anticipated for the latter half of this year, possibly offsetting the conventional annual peak season.
Even as turbulent times loom over freight travel, recent reports from IATA pointed towards thriving cargo demand that showed a growth of 5.8% in the month of April compared to the same period last year.
Furthermore, cargo traffic, a combination of tonnage and distance indicators, also saw a positive adjustment – a 2.4% increase on a year-on-year basis during the first financial quarter, this according to information curated by IATA.