Global air cargo markets posted a robust rebound in July, with demand rising 5.5% year-on-year, even as trade flows on the traditionally dominant Asia–North America corridor continued to weaken. The latest figures from the International Air Transport Association (IATA) point to renewed resilience in air freight, as shippers accelerated movements ahead of tariff deadlines in the ongoing U.S.–China trade dispute.
Front-Loading Spurs Growth
Seasonally adjusted cargo tonne-kilometers (CTKs) recorded their second-strongest increase of the year, expanding 5.1%, behind only April’s peak. According to IATA, much of the uplift stemmed from shippers front-loading goods into the U.S. ahead of tariff deadlines in early August. Many opted for the speed and reliability of air freight over slower transport modes to meet deadlines.
Willie Walsh, Director General of IATA, noted that this front-loading effect “likely offset a sharp decline in e-commerce volumes, as U.S. de minimis exemptions on small shipments expired in May.”
Trade Lane Divergence
Despite overall growth, the Asia–North America trade lane remained the weakest performer. Demand on the corridor fell 1% year-on-year, marking the third straight month of decline following sharper contractions of 10.7% and 4.7% in May and June. While this represented a relative improvement, it underscored the challenges stemming from U.S.–China trade tensions.
By contrast, demand on the Europe–Asia trade lane surged 13.5%, extending a 29-month streak of expansion. Walsh emphasized the importance of a broader view of market dynamics: “While U.S.-linked markets are under the spotlight, one-fifth of global air cargo now moves between Europe and Asia, making it a crucial growth engine.”
Regional Performance
- Asia-Pacific carriers posted the strongest performance globally, with demand up 11.1%, reflecting a pivot in Chinese exports toward Europe and intra-Asia trade.
- North American carriers saw modest growth of 0.7%, weighed down by slowing e-commerce and weaker China flows.
- European carriers recorded a 4.1% demand increase, benefiting from the buoyant Europe–Asia lane.
Air freight analyst Tom Crabtree of Drewry Supply Chain Advisors noted that Chinese exporters are “refocusing on more reliable partners outside the U.S., particularly in Europe and the Far East.”
Capacity and Emerging Hubs
Global capacity, measured in available cargo tonne-kilometers (ACTKs), rose 3.9% year-on-year in July, still lagging demand growth. Asia-Pacific carriers led capacity expansion with a 7.3% increase, as airlines added belly and freighter capacity in anticipation of peak season demand.
Vietnam emerged as a major beneficiary of supply chain realignments, with capacity on Vietnam–U.S. routes surging 95% year-on-year in August to 2,400 metric tons, according to data provider Rotate. Vietnam Airlines has confirmed plans to launch a dedicated cargo subsidiary by late 2025, converting several A321s into freighters, with the first aircraft due in service in Q4 on regional routes.
Air cargo already accounts for 65% of Vietnam Airlines’ revenues in Q2, underscoring the sector’s rising importance as U.S. tariffs hit Chinese exports and redirected flows to Southeast Asia.
Bangladesh is also capitalizing on the shift. Hong Kong Air Cargo has doubled its Hong Kong–Dhaka frequency to twice weekly, while Lufthansa Cargo and India’s IndiGo recently partnered to provide freighter capacity from Dhaka to Los Angeles via Ho Chi Minh City.
Market Outlook
The traditional peak season begins in September, with forwarders expecting stronger flows from Vietnam, Thailand, and Malaysia, outpacing Chinese volumes on key eastbound trans-Pacific routes. Growth is expected to be driven by AI servers, consumer electronics, and high-tech goods.
Despite strong demand, global air cargo rates have continued to soften. The TAC Index reported a 1.7% decline in global average spot rates in the week leading up to 25 August.
Conclusion
The July rebound highlights both resilience and volatility in the global air cargo market. While front-loading and Southeast Asia’s rise buoyed performance, the sustained weakness of the Asia–North America trade lane reflects deeper geopolitical and structural shifts. With capacity growth trailing demand and the peak season approaching, carriers and forwarders are bracing for heightened competition, shifting trade flows, and a new balance of power across global supply chains.
In Brief –Global air cargo demand increased by 5.5% in July 2025 compared to the previous year, driven by growth in most major trade lanes, though demand on the Asia–North America route declined by 1.0%. This rebound, representing a significant acceleration from the previous month, is seen as a response to shippers front-loading goods ahead of tariff deadlines and amidst trade tensions between the US and China.
Key Details
- Growth: Overall global air cargo demand saw a 5.5% year-on-year increase.
- International Operations: Demand for international air cargo operations grew by 6.0%.
- Asia-North America Weakness: The Asia–North America trade lane experienced a 1.0% year-on-year decrease in demand, a significant exception to the overall growth.
- Context: The increase in demand is partially attributed to shippers rushing to move goods before anticipated tariffs and heightened trade tensions between the US and China.
- Capacity: Overall cargo capacity increased by 3.9% in July 2025, with international capacity rising by 4.5%.
Sources: IATA (International Air Transport Association) and Indian Transport & Logistics.
