Summary:
- Red Sea conflict not likely to contribute to further demand growth in 2025
- US East Coast port strikes in October contributed to 12% month-on-month jump in Europe to US air cargo volumes – threat of further strikes in 2025
Conflict in the Red Sea has seen a mode shift from ocean to air during 2024. With little prospect of a large-scale return of container ships transiting the Suez Canal, this will remain a key theme in air cargo demand in 2025.
That said, the mode shift has already been largely established, so while Red Sea disruptions will continue, it is unlikely to contribute much to air cargo demand growth in 2025.
This trend is already seen on the Middle East to Europe corridor where year-on-year volume growth has decelerated from more than 40% in Q1 to 21% in Q3, before falling further to 8% in November.
Volumes in Q3 this year were down 2% on this corridor from Q1 in the immediate aftermath of the Red Sea crisis.
Is there anything that could cause an acceleration of mode shift?
If there is a major change in the geo-political situation and a large-scale reopening of the Red Sea, there could be a renewed acceleration of mode shift and air cargo demand growth for a few months. This is due to the likely severe congestion and deterioration in schedule reliability if large numbers of ships stop transiting around the Cape of Good Hope and begin arriving at destination ports at the same time.
The threat of further strikes at ports on the US East Coast and Gulf Coast in January could also cause congestion and deteriorating schedule reliability. During the first round of strikes on 1-3 October, the ocean to air mode shift contributed to a 12% month-on-month jump in Europe to US air cargo volumes.
“The Red Sea effect on the air freight market has plateaued and might even recede in 2025. This could provide a bit of breathing space for shippers, but the threat of further disruption remains given the geo-political climate.”
Niall van de Wouw
Chief Airfreight Officer, Xeneta