Airfreight needs to prepare for an already tight market becoming even tighter as an ongoing capacity crunch looks likely to be ramped even further by political and policy changes. 

“I would start managing expectations of the CFO,” Niall Van der Wouw, Chief Airfreight Officer for ocean and airfreight benchmarking and market analytics platform Xeneta told an end-of-year webinar. He also suggested companies turn to indexing for what he called “operational stability.” Such a response, he said, was not a price guarantee but was a way to ensure goods got moved. 

Xeneta’s basic argument is the world economy will be similar in 2025 to this past year, with flattish GDP growth and easing inflation supporting discretionary spending and, with it, demand. Helping the industry big time is e-commerce powering ahead and looking likely to do so for the coming few years at 14 percent growth annually, said Van der Wouw, citing American Bureau of Commerce and unnamed consultancies projections. “There is still a lot of growth,” he said. 

On the supply side likely developments “mainly create upward pressure,” Van der Wouw added. This is particularly true of slower growth in widebody capacity – much as manufacturers try to get new planes into the market their efforts, their efforts are being countered by strikes and labour shortages, there are no significant additions to the fleet, meaning the market will remain tight as demand keeps rolling.

One practical suggestion made by Glyn Hughes, Director General of the International Air Cargo Association (TIACA) who also took part in the webinar was for the industry to work on deferring retirements. “Our ability as an industry is very limited to really control any of these (factors). We need to work closely with governments,” Hughes said showing how little scope there really might be. 

In balancing this, various wild cards need to be considered. One is the prospect of American and European regulators cracking down on e-commerce shipments, particularly via tax rules. “That could put a damper on that growth,” Van der Wouw said. 

Also in this category is the incoming Trump presidency in the US and the disruptions it could bring. 

Ahead of taking office, Trump has already signalled support for the planned closure of US ports by the International Longshoremen’s Association, as part of their campaign against mechanisation with a strike due to begin on 15th January – one week before Trump becomes President.  Closing sea ports would mean things have to be brought in via air with a rise in volumes and prices – even if the actual stoppage is short-lived. 

“This is a much more challenging topic to overcome,” Glyn Hughes, Director General of The International Air Cargo Association, pointing out the amount of cargo needing moving will be huge but an already stretched and some air cargo sectors“ can only move a microscopic amount.” 

Dramatic as that might be particularly in terms of rates and planes being moved it also has an offset needing to be considered; the same President Trump also has plans for what Hughes diplomatically described as “significant new tariffs” for goods entering from China. The tariffs are 60-70 percent and cover a lot of Chinese products. 

“We might see retaliatory measures which would then impact everybody negatively,” warned Hughes. 

 Such a trade war doesn’t just run the risk of disrupting the industry but also reconfiguring it. “We may also see an acceleration of China Plus One,” said Hughes who pointed out this is likely in the long term to create more air volumes between China and various ‘plus one’ countries such as Malaysia and Vietnam. 

Nor does the list stop here, with Van der Wouw citing some events which sadly do occur but which, in a tight, tight market, are hugely disruptive. One example is natural disasters which last two or three days but have an impact of a couple of weeks on supply chains. 

More disturbingly is criminal activities such as cyber attacks and incendiary devices self-igniting on planes. “Least likely, but it could have the biggest impact,” said Van der Wouw of this category. The industry, he added “(needs to) come up with a risk mitigation strategy.”  

He cited two possible outcomes here which are difficult (and horrible) to think about. One is a device igniting on a plane that sees regulators not just increase the rules about moving things maybe even going as far as to stop cargo going on passenger planes, with a more extreme measure maybe even being a   freight embargo. It’s not what anyone wants, but maybe something to ponder at the outset of what looks like being a good, if not very good, year. 

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