Global air freight demand has seen a significant decline, dropping by 4.8 per cent year-on-year in March, as reported by the International Air Transport Association (IATA). This downturn can be attributed to various external factors, including disruptions at key logistics hubs, particularly in the Middle East.
The drop in demand is notably steeper in international operations, which experienced a 5.5 per cent decline compared to March 2025. Concurrently, cargo capacity also fell, decreasing by 4.7 per cent overall, with international capacity down by 6.8 per cent.
Air freight: External Factors Influencing Demand
IATA’s director general, Willie Walsh, highlighted that the primary reason for this decline is the severe disruptions caused by ongoing conflicts in the Middle East. “Air cargo demand fell 4.8 per cent in March compared to the previous year,” Walsh stated, emphasising the impact of geopolitical instability on air freight operations.
He also noted that the seasonal timing, particularly the post Lunar New Year slowdown, contributed to the fall in demand. Despite these challenges, Walsh expressed optimism about future growth trends, stating, “The underlying demand trends at this point appear strong.”
Positive Economic Indicators
The global economic landscape offers some encouragement, as broader indicators suggest a continued recovery. Global industrial production rose by 3.1 per cent year-on-year in February, marking the 38th consecutive month of expansion. Alongside this, global goods trade increased by 8.0 per cent, showcasing resilience in international commerce.
The manufacturing sector remains optimistic, with the global Purchasing Managers’ Index at 51.4 in March, and new export orders reaching 50.1. Both figures indicate growth potential, even amidst the current challenges in air freight.
Cost Pressures and Fuel Prices
However, the air freight industry faces increasing cost pressures, particularly from rising fuel prices. Jet fuel costs surged by 106.6 per cent year-on-year in March, while crude oil prices rose by 43.1 per cent and refining margins skyrocketed by 320 per cent. Walsh remarked, “All eyes are on fuel supply and price, which are expected to test the industry’s resilience in the coming months.”
Diverging Regional Performances
Regional performance in air freight has varied widely, reflecting the uneven impact of geopolitical events. In the Asia-Pacific region, airlines recorded a 5.4 per cent increase in demand, supported by a 5.0 per cent rise in capacity. Meanwhile, European carriers saw demand grow by 2.2 per cent with a 4.2 per cent increase in capacity.
African airlines demonstrated remarkable growth, reporting a 7.0 per cent rise in demand despite a 4.6 per cent drop in capacity. In contrast, North American carriers faced a 1.2 per cent decline in demand and a 1.1 per cent reduction in capacity.
Middle East Struggles
The most severe contraction was observed in the Middle East, where demand plummeted by 54.3 per cent and capacity fell by 52.4 per cent. This represents the weakest performance globally, underscoring the significant impact of ongoing conflict on regional airspace and logistics networks.
In Latin America and the Caribbean, carriers recorded a modest 1.8 per cent increase in demand, supported by a 5.1 per cent rise in capacity. Trade flows have also shown varied trends across major corridors, with Africa-Asia routes leading global growth.
Geopolitical Impact on Supply Chains
As geopolitical tensions continue to affect logistics, Gulf-linked trade corridors have faced severe disruptions. Walsh noted, “Air cargo networks are providing the flexibility needed to support global supply chains as they adjust to geopolitical, tariff and operational strains.” This highlights the critical role of air freight in navigating the complexities of international trade during turbulent times.
