What is the real formula behind air cargo growth?

Forecasting air cargo demand has never been more challenging or more critical. Airlines, lessors, integrators, and forwarders are navigating a mix of economic cycles, supply chain shocks, and structural shifts like trade wars. The old rules of thumb — such as GDP growth equals cargo growth — no longer provide enough precision for decision-making. Instead, the industry is moving toward a more refined approach, blending long-run fundamentals with short-term, high-frequency indicators. So, what truly drives air cargo demand today, and how can we quantify the relationships? From GDP to trade: the macroeconomic pillar The foundation remains the same: Global economic activity sets the ceiling for how much freight is exchanged internationally. GDP growth and global trade volumes are highly correlated with cargo tonne-kilometers (CTKs). For decades, global trade expanded at roughly twice the rate of GDP, which made forecasting relatively straightforward. That multiplier was reduced to ~1.1x after the 2008 financial crisis, reflecting reshoring, protectionism, and a more mature globalization cycle. Figure 1 shows how the last few years have seen a higher degree of growth volatility. Figure 1 - Air Cargo Traffic Growth (1980 - 2025)

Still, GDP and trade remains essential. The IMF through its World Economic Outlook projects trade growth of ~3% annually and our air cargo growth closer to 3.3%, implying an elasticity of 1.3–1.4 (meaning air-cargo volumes change roughly 1.3–1.4% for each 1% change in world trade). In other words, air cargo tends to expand faster than trade because it handles high-value, time-sensitive shipments at the margin. During downturns, the reverse applies: When GDP contracts, air cargo typically falls even more steeply, underscoring its cyclical sensitivity.

Manufacturing PMI: the best leading indicator

If GDP and trade are the foundational freight drivers, manufacturing outlook is the tactical compass. Among all indicators, the PMI New Export Orders sub-index stands out. In the last five years of analyzing this trend, the global PMI for new export orders has shown an average of 83% correlation with air freight growth, with a two-month lead time. This makes PMI the single most reliable short-term forecasting tool.

When the index rises above 50, signaling expansion, air cargo almost always rises soon after. On the other hand, when it goes below 50, air freight slows down. For analysts and operators, watching the PMI is like watching the weather radar: an early signal of turbulence ahead.

That said, recent years have shown the limits of PMI. In 2024, global CTKs rose by double digits even while PMIs sat below the growth threshold. Why? E-commerce and supply chain disruptions temporarily decoupled air freight demand from traditional manufacturing cycles. This points to a new reality: PMI remains vital, but it is not enough on its own. Our PMI dashboard shows current and historical PMI levels for major global economies , with quick comparisons at the country level on a monthly and quarterly basis.

Figure 2 – Example of Cargo Facts Consulting’s PMI Dashboard

Inventory cycles: the hidden accelerator The inventory-to-sales ratio is another high-frequency indicator with the ability to predict air cargo activity. When businesses run short on inventory, they often choose air freight to restock quickly. When inventories build up, demand for new shipments falls. A 0.01-point decline in the inventory-to-sales ratio corresponds to an increase of 0.9 percentage points in air freight growth relative to global trade. This clear elasticity helps explain recent cycles. In 2021, when inventories were reduced suddenly after the pandemic, air freight demand climbed to record highs. By contrast, the excess stocking of 2022–2023 put pressure on cargo volumes even though trade flows held steady. See Figure 3 for an example of this ratio in the United States. The pandemic also pushed many companies from “just-in-time” to “just-in-case” inventory models. If businesses hold more stock, the intensity of the air freight response to low inventories could moderate in the future. But for now, inventory ratios remain one of the best short-term signals of demand inflection points. Figure 3 – United States Retailers: Inventories to Sales Ratio, Monthly, Seasonally Adjusted

E-commerce: a structural shift Unlike cyclical drivers, e-commerce is structural. Cross-border online retail and fast-fashion platforms have permanently raised the baseline of air freight demand. At Cargo Facts Consulting, we estimate that e-commerce already accounts for more than 21% of air cargo volumes in 2025, a share that has been growing since before the pandemic. For integrators and airlines with express-focused networks, this segment has become the main driver of expansion, reshaping schedules and freighter conversion pipelines. E-commerce is less about elasticity to GDP or trade, and more about creating new sources of demand entirely. That is why during 2024, even when manufacturing indicators looked weak, air freight demand surged because consumer-driven parcel flows followed their own cycle. The role of relative costs: air vs. ocean Air freight competes with ocean shipping. The air-to-sea cost ratio is a critical demand driver. Historically, air has cost 10–15 times more per kilo than ocean. But when the pandemic disrupted maritime supply chains, that ratio narrowed to 4–8x, making air cargo far more competitive. Figure 4 –Historical Ocean vs. air freight rates ratio

Elasticity here is case-specific but, during the 2021 ocean crisis, shippers clearly shifted discretionary cargo to air, triggering record utilization of freighters and even passenger aircraft used as “preighters.” If container rates spike again due to geopolitical disruptions like the Red Sea diversions in 2024, for example, we can expect another temporary surge in air volumes. As the container shipping industry consolidates, with the top 10 operators now controlling ~86% of capacity, higher and more stable maritime rates could keep air cargo structurally more competitive than in the pre-pandemic era. Costs and financial conditions Fuel prices and interest rates also matter, but mostly at the margins. Air-cargo demand is relatively price-inelastic, with estimated price-elasticity coefficients of about –0.1 to –0.2. A 10% increase in rates may reduce volumes by just 1% – 2%, since most shipments are too urgent or valuable to switch modes. That said, high fuel costs can shape capacity decisions. Airlines may ground older freighters or cut marginal routes when fuel surges, leading to fewer departures, even if CTKs hold steady. On the other hand, low fuel prices support more flights, especially for bellyhold capacity on passenger aircraft. Interest rates and exchange rate volatility also dampen trade flows, though their effects are usually channeled through broader trade and production metrics. See Figure 5 for a historical view of jet fuel cost since 2014. US Gulf Coast Kerosene-Type Jet Fuel Spot Price is currently at $2.02, down from $3.39 two years ago, a decrease of 35%. This is good news for carriers, as operating costs have dropped. Figure 5 - U.S. Gulf Coast Kerosene-Type Jet Fuel Spot Price FOB (USD/Gallon) – as of Sept 08, 2025

The wildcards: shocks and capacity Not everything fits neatly into an elasticity model. Geopolitical shocks such as wars, sanctions, tariffs or global pandemics can disrupt both demand and supply in unpredictable ways. The Russia-Ukraine War, for instance, closed airspace and raised fuel burn on rerouted flights. U.S.-China tariffs have reshaped flows between the world’s two largest markets. On the supply side, the return of international passenger travel has restored bellyhold capacity, weighing on yields for dedicated freighters. This supply recovery is as important as demand in shaping market balance and must be factored into any forecast. Bringing it all together: a multi-factor model The lesson is clear: No single driver explains air cargo demand today. Effective forecasting requires a multifactor approach: Long-term fundamentals: GDP and trade growth set the baseline. High-frequency indicators: PMI new export orders and inventory-to-sales ratios provide early signals of turning points. Structural shifts: E-commerce and modal competition with ocean freight are reshaping the market. Shocks and supply dynamics: Geopolitics and capacity swings can reverse fundamentals in the short term. For stakeholders in the industry, the practical takeaway is to track not just one or two metrics, but a dashboard of indicators: some leading, some structural, some contextual. Only then can we anticipate both the cyclical swings and the long-run trajectory of the industry. Conclusion: Turning volatility into opportunity Air cargo remains one of the most cyclical and structurally promising sectors of aviation. Its demand is attached to global trade but also increasingly fueled by new drivers like e-commerce and modal shifts. Forecasting requires moving beyond simple GDP multipliers to adopt elasticities, correlations, and structural change. At Cargo Facts Consulting, we continue to refine these models, integrating data from trade flows, PMI indices, inventories, e-commerce trends, and freight cost ratios. The goal is simple: to give stakeholders sharper tools for anticipating the next cycle, positioning fleets, and capturing growth in an industry that moves at the speed of the global economy itself. If you would like to learn more about our approach or discuss how these insights can support your strategy, please feel free to contact us at Cargo Facts Consulting . We would be glad to explore how we can help you anticipate the next cycle and position for growth.

What is the real formula behind air cargo growth?

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