With global supply chains adjusting to post-pandemic realities and shifting trade dynamics, air cargo in the Asia-Pacific (APAC) region faces a critical juncture.

Once the world’s fastest-growing airfreight market, APAC carriers are now contending with evolving e-commerce flows, fluctuating capacity, and intensifying competition from Middle Eastern and North American freight operators.

The latest annual results from major APAC airlines—Cathay Cargo, Singapore Airlines Cargo, Korean Air Cargo, and China Southern Cargo—highlight both the opportunities and risks ahead.

• e-commerce demand is driving cargo tonnage growth, but shippers are delaying commitments amid economic uncertainty.

• Belly capacity is returning, lowering yields and putting pressure on freighter profitability.

• Airlines are re-evaluating fleet strategies—some are doubling down on dedicated freighters, while others are shifting to a hybrid cargo model to optimise belly space.

• Trade tensions and supply chain shifts, especially involving China, are prompting new regional cargo flows, with Southeast Asia emerging as a strategic alternative.

The question now is which APAC airlines will navigate these changes successfully— and which might struggle to maintain profitability in 2025. e-commerce has been a primary driver of airfreight growth across APAC, fueling demand for cross-border express shipments from China, Hong Kong, and Southeast Asia. Cathay Cargo’s latest results highlight an 11 percent increase in cargo tonnage in 2024, with a particularly strong second half due to a surge in e-commerce shipments.

However, the pace of growth appears to be moderating, with freight forwarders delaying contract commitments and retailers reconsidering inventory strategies.

Some of the key trends shaping e-commerce-driven air cargo include:

• Freight forwarders postponing Block Space Agreements (BSAs) amid concerns over rate volatility.

• Shippers redirecting cargo from China to Southeast Asia to mitigate potential tariff impacts.

• More cautious market sentiment, contrasting with the aggressive expansion strategies seen in previous years.

Singapore Airlines Cargo has also reported stable cargo volumes, but with increased competition in the e-commerce logistics space, margins are tightening. Korean Air Cargo and China Southern Cargo are similarly monitoring how shifting trade patterns may affect their network planning. The overarching challenge is whether APAC airlines can remain agile in responding to these changes while maintaining efficiency in their operations.

Freighter vs. belly cargo

One of the most pressing strategic decisions for APAC cargo carriers is how to balance dedicated freighter operations with the growing availability of belly cargo capacity. During the pandemic, freighters were indispensable, providing airlines with reliable revenue streams as passenger operations were suspended.

Now, with international travel rebounding, belly cargo space is returning, forcing airlines to reassess the economics of freighter expansion.

• Cathay Cargo continues to operate a dedicated freighter fleet while integrating more belly cargo into its network.

• Korean Air Cargo is expanding its freighter fleet, particularly with Boeing 777Fs, maintaining focus on long-haul markets.

• China Southern Cargo is refining its network, shifting some focus away from freighter-heavy routes and maximising efficiency with a combined approach.

With more passenger aircraft in service, belly capacity is increasing faster than demand, resulting in softer yields. Cathay Cargo’s annual report notes that cargo yields were only 3 percent higher in 2024, reflecting growing competition and a return to pre-pandemic pricing structures. The challenge for airlines is to ensure that freighter fleets remain profitable while fully utilising available belly space.

This balancing act will define who remains competitive in the coming years. Another critical factor shaping APAC’s air cargo landscape is geopolitical uncertainty and shifting trade policies. China remains the largest driver of air cargo volumes in the region, but trade tensions and supply chain diversification strategies are causing significant shifts in cargo routing:

• Uncertainty over tariffs is leading to delays in contract negotiations between freight forwarders and cargo carriers.

• Some airlines are adjusting capacity allocations, shifting flights from China to alternative hubs in Vietnam, Thailand, and Indonesia.

• Freight forwarders are hedging against risk, securing flexible agreements instead of committing to long-term cargo space.

Airlines operating in the region must be prepared to navigate evolving trade dynamics, ensuring that their networks remain adaptable to changing cargo flows. While cargo demand remains relatively strong, cost pressures are mounting for APAC carriers.

Airlines must contend with:

• Labour shortages and rising airport fees, driving up operational expenses.

• Fuel price fluctuations, which—despite being lower in 2024—remain unpredictable.

• Stricter sustainability regulations, requiring investment in Sustainable Aviation Fuel (SAF) and emissions reduction initiatives. Cathay Cargo has been focused on cost efficiencies, reporting a 4.5 percent decrease in cost per available tonne kilometre (ATK)—a key metric for assessing profitability.

Singapore Airlines Cargo and Korean Air Cargo have also been exploring SAF initiatives to align with global decarbonisation goals. For APAC airlines, the ability to balance profitability with sustainability will be a crucial differentiator in the years ahead.

Who will lead APAC’s next cargo era?

The Asia-Pacific air cargo market is at a crossroads, with airlines facing both significant challenges and new opportunities.

• Major players like Cathay Cargo, Singapore Airlines Cargo, Korean Air Cargo, and China Southern Cargo are all recalibrating strategies to remain profitable.

• Belly cargo growth is increasing competition, putting downward pressure on yields.

• Trade tensions and supply chain shifts are prompting regional realignments, with Southeast Asia playing an expanding role in APAC logistics.

• Sustainability mandates are reshaping industry priorities, forcing airlines to invest in fuel-efficient aircraft and greener cargo operations.