How Onshoring Has Reduced Air Cargo Volume

Passenger air traffic is surging worldwide, yet air cargo volumes have remained stagnant. According to the International Air Transport Association (IATA), this divergence has been particularly sharp over the past decade, driven in large part by the global shift towards onshoring—the practice of sourcing goods locally rather than internationally.

Air Cargo vs Passenger Growth: A Broken Correlation

Historically, air cargo acted as a leading indicator for passenger volumes, with both rising and falling in tandem depending on economic conditions. But IATA’s chief economist, Brian Pearce, highlighted at the IATA World Cargo Symposium that this relationship has weakened dramatically since 2010.

• In 2013 alone, there was a US$20 billion divergence in revenues between passenger airlines and cargo operators.

• While air cargo has traditionally thrived during peaks of global economic growth, volumes have flatlined since 2010, even as passenger traffic soared.

• This suggests structural changes in trade and production, not just cyclical fluctuations.

The Rise of Onshoring and Its Impact

One of the most influential forces behind this trend is onshoring. As more businesses opt to source products closer to home, reliance on international shipping has eased. The historical 2.5-to-1 ratio of international trade versus domestic production has stalled, directly impacting demand for cross-border air freight.

Other key factors include:

• Mode Shift to Ocean Freight – Many shippers are prioritising ocean freight solutions for cost efficiency, particularly for bulk goods that are less time-sensitive.

• Trade Protectionism – Rising tariffs and protectionist policies have slowed global trade flows.

• Labour Costs in China – As wages rise, manufacturing has shifted closer to consumer markets, further reducing long-haul air cargo demand.

A Mixed Outlook for the Air Cargo Industry

Despite these headwinds, Pearce noted that the long-term picture for air cargo is not entirely negative. As China’s middle class expands and becomes wealthier, consumer demand for higher-value goods could drive renewed growth in international air freight.

Still, the central question for the industry remains:

• Is the slowdown in air cargo volumes a temporary blip or a permanent structural shift?

What This Means for Supply Chain Managers

For businesses relying on international freight, these shifts carry significant implications:

1. Diversify Freight Modes – With ocean freight gaining ground, many shippers are blending air and sea transport to balance speed and cost.

2. Adapt to Protectionism – Companies must plan around tariffs and regulatory hurdles by leveraging experienced freight forwarders.

3. Monitor Market Signals – Tracking shifts in global production and consumer demand is critical to anticipate logistics costs and capacity.

4. Invest in Flexibility – Supply chains should be resilient enough to pivot between international and domestic sourcing strategies.

Conclusion: Navigating a Changing Freight Landscape

The slowdown in air cargo volumes reflects more than short-term economic turbulence—it signals deeper changes in global supply chains and sourcing strategies. As onshoring and trade protectionism continue to shape demand, logistics managers must rethink their reliance on air freight and develop adaptive, multimodal shipping strategies.

With over 35 years of expertise, K&L Freight helps businesses stay ahead of these shifts, offering customised freight solutions across air, sea, and road to ensure supply chain resilience in a changing world. Contact us today.