The Air Cargo Market Reverses Course: Sharp Rate Declines Amid Cooling Demand
October 2025 has recorded an unprecedentedly muted peak season for the air cargo industry. Freight rates continued to decline for the sixth consecutive month, while capacity remained ahead of demand. This dynamic is creating a rare rebalancing phase, reshaping the relationship between airlines, freight forwarders, and shippers across the global market.
A Peak Season That Is No Longer “Peak”
Under normal circumstances, the fourth quarter is the traditional acceleration period for air cargo. This year, however, the market is moving in the opposite direction. Although volumes increased by 4% year-on-year, this growth still lagged behind capacity expansion, which reached approximately 5%. As a result, the market remains oversupplied, pushing spot rates down to USD 2.58 per kilogram, 3% lower than the same period last year.
Even key trade lanes such as Southeast Asia–North America and Northeast Asia–North America recorded sharp year-on-year rate declines of 21% and 10%, respectively. Typical peak-season signals—such as capacity shortages or sudden volume surges—were largely absent.
At the same time, fundamental demand drivers weakened. The United States’ termination of the de minimis duty-free policy in August, combined with a prolonged downturn in e-commerce shipments from China, significantly constrained growth. In September, e-commerce volumes fell by 34% year-on-year, placing substantial pressure on trans-Pacific routes that have traditionally relied heavily on this cargo segment.
Market Shifts in Favor of Shippers as Airlines Face Mounting Challenges
The sustained decline in freight rates has altered the market balance. Shippers now enjoy greater bargaining power and a wider range of options, while airlines and freight forwarders are forced into intensified competition to secure volumes. Several carriers have begun announcing cost-cutting measures amid an increasingly unfavorable market outlook.
On major corridors such as Europe–North America, volumes fell by 6% in October. Although freight rates on this lane edged up 4% year-on-year, the increase has slowed significantly compared with earlier in the year, reflecting the broader cooling of global trade.
While lower freight rates may offer short-term relief for shippers, their primary concern remains end-market demand. As sales decline and consumer spending softens, transportation cost savings alone are insufficient to offset the broader impact of a weakening market.
The industry is therefore entering a phase of strategic repositioning. Airlines are being forced to recalibrate pricing strategies, optimize fleet deployment, and exercise tighter control over operating costs. Freight forwarders, meanwhile, must adopt greater flexibility to preserve margins amid intensifying competition.
October 2025 underscores the fact that air cargo has lost its traditional seasonal growth momentum. Declining rates, subdued demand, and a cooling global trade environment are pushing the industry into a period of transition. In the near term, freight rates are likely to remain under downward pressure until demand indicators show clearer signs of recovery.
This is a critical phase in which logistics companies must closely monitor market movements and restructure their strategies to adapt to a new market trajectory.
