Christmas came early for global air cargo volumes in November with a further 5% year-on-year boost in demand adding to the seasonal growth but the industry's ecommerce 'growth engine' of the past two years is slowing down, according to the latest market analysis from Xeneta.
The air cargo market data provider said while the demand outlook for the traditionally busiest time of year looked flat heading into the last four months of 2025, September and October's demand levels were surprisingly robust at 3% and 4% year-on-year respectively.
"The continuation of this upward trend in November kept the market on track to deliver 4% growth for 2025 ahead of what looks set to be a more challenging year in 2026," Xeneta said.
Capacity expansion in November broadly matched demand, although growth in supply over the year remained slower than the demand surge. The report noted that this gradual rebalancing of demand and supply has still to show up significantly in lower global cargo spot rates, although November's 5% decline year-on-year to US$2.73 per kg was above the corresponding 3% drop recorded in October.
The disconnect suggests carriers are chasing market share at the expense of price discipline, squeezing yields in an already downbeat market.
Xeneta noted that month-on-month, global air cargo spot rates rose by 6% in November, a more subdued increase than the 9% recorded a year ago.
Across all major trade lanes, corridor-level air cargo spot rates in November were lower than a year earlier.
"November market performance was certainly better than indicators suggested earlier in the year as many traditional shippers kept to their annual shipment cycles. Greater understanding of the realities of U.S. trade tariffs was also a factor," said Niall van de Wouw, chief airfreight officer at Xeneta.
Actual U.S. tariffs not as bad as feared
"We are now seeing studies on the impact of actual implemented U.S. tariffs and despite all the noise, the global average seems to be in the 10-12% range and not the 30, 40, 50 or 100% levels that were threatened in April. So, while the impact is there and it is unsettling for the airfreight market, it's not as dramatic as was feared and is not yet hitting consumer demand to a concerning level," he added.
This situation, however, is likely to change in 2026, van de Wouw added.
"Some shippers have absorbed the increases and are yet to pass on these extra costs to consumers, but with stocks running low and inventory replenishment on the horizon, we expect to see more tariff impact on air cargo volumes next year," he said.
"U.S. consumer confidence is reportedly starting to fall, and higher prices next year are likely to exacerbate this sentiment."
While acknowledging the air cargo market is 'busy getting through the quarter' in Q4, latest data for the industry's demand 'growth engine' of the past two years is "concerning."
"For ecommerce and traditional air freight, this is by no means a peak season, but it's a busier season than looked possible a few months ago. But after two years in which the growth of air cargo has been so reliant on ecommerce, there is now a question mark over demand for cargo capacity in the coming year."
"I doubt the global economic concerns will greatly impact the likes of Temu because of the ability of China's factories to produce stuff at a very low cost for consumers willing to buy them, but the big question for the air cargo industry is whether China's ecommerce volumes to the world can keep on growing as they have been?"
"The indicators suggest it will be very difficult to maintain - and we're already starting to pick up on flattish growth of ecommerce year-on -year, which is not something we've seen in the last 2 years," van de Wouw added.
Flat growth for China's cross-border ecommerce
The IATA chief airfreight officer highlighted warning signs for ecommerce volumes heading into 2026.
"After 27 straight months of near 40% year-on-year growth, China's total cross-border -commerce sales were flat in October, based on the latest market data from China Customs," he said.
"Even robust expansion from China to Europe - up 47% in October - was offset by declines to the rest of Asia, down 3%, and a dramatic 51% drop in ecommerce shipment volumes to the U.S. in this new post de minis environment."
Despite strong growth in October, ecommerce volumes into Europe could also be impacted by increasing regulation, with the EU set to introduce its own accelerated de-minimis reform in 2026 to close loopholes exploited by low-value shipments.
The EU handled around 4.6 billion such parcels in 2024, with up to 65% believed to be undervalued. 91% of all ecommerce shipments to the EU valued under €150 came from China. In a similar way to the US in 2025, the EU is now aiming to curb undervaluation and level the playing field for domestic retailers."
The Xeneta analysis noted that while the rollout of an EU data hub for ecommerce will not be ready until 2028, a temporary solution is expected in 2026. Earlier proposals included a flat €2 handling fee for shipments sent directly to consumers and €0.5 for warehouse-handled items. Nonetheless, such measures are unlikely to materially suppress demand, considering their marginal impact on cost in comparison to alternatives for consumers.
"A greater impact on air cargo demand would come from any changes that slow down the supply chain or introduce hefty extra fees," van de Wouw said.
Modest low single-digit demand growth in 2026
The air cargo industry will head into the New Year with expectations of only modest, low single digit growth for the year ahead.
"We expect supply to grow more than demand in 2026, and that will have an impact on rates. I also do not think low, single-digit demand growth will satisfy the appetite and ambition of freight forwarders, especially the listed ones that need to grow much faster in the market. So, the only way to do that is to grab market share, which would place a further downward pressure on rates in favour of shippers," van de Wouw said.
"Right now, the consensus is the market will do well to achieve demand growth of 2-3% in 2026," he added.