Transportation in the face of slowing global trade
In 2025, the volume of global merchandise trade is expected to grow by 2.4%, i.e., at a slower pace than the historical average of 3% posted between 2010 and 2019, and below the 2.8% growth rate recorded in 2024. However, the figure is well above the World Trade Organization’s April forecast (0.2% in April 2025) following the White House’s tariff announcements. Rather than weakening trade flows, these protectionist measures prompted a surge in frontloaded shipments during the initial months of 2025. As a result, the value of world merchandise trade rose by 6% year-on-year in the first half of 2025, which is a sizeable acceleration compared to the 2% increase recorded during the same period in 2024.
The effect of these tariff increases is expected to materialise later in 2025 and into 2026 as the announced measures take effect and the temporary boost from early shipments fades. Hence, global trade volumes are set to grow by only 0.5% in 2026. Regionally, transportation activity in North America is likely to soften, partly owing to weaker demand from the US amid elevated inventory levels and tariff-induced inflationary pressures. As the world’s largest importer, reduced demand from the US is likely to damp export performances in other economies. Consequently, merchandise transport activity may also decelerate in some of the countries in regions that are heavily reliant on trade with the US, such as Asia and South America. Meanwhile, European transportation businesses may continue to face subdued domestic consumption and sluggish manufacturing production.
Slower global trade growth should affect all modes of transportation. The shipping industry, which handles around 90% of global trade, is particularly exposed. Also used for international trade, air cargo growth will continue to recede, after reaching record high levels in 2024. Mainly used for regional and domestic transport, road and rail will develop differently according to local trends. Persistent truck driver shortages in several European countries, as well as in China, Mexico and Türkiye will continue to disrupt activity. Rail transport, although the least-polluting mode of transport and often more cost-effective than trucking, will continue to suffer as a result of its less flexible nature and ageing infrastructure in developed countries.
Moderate oil prices but costly green transition
As in 2025, transport businesses are set to reap the benefits of moderating crude oil prices. Coface forecasts an average of USD 60 per barrel in 2026, down from the USD 65-70 range anticipated for 2025. The decline will have a notable impact on airlines, for which fuel (mainly kerosene) accounts for around 30% of their total costs. Combined with sustained demand, lower fuel prices have helped airlines maintain profitability. In the first half of 2025, globally listed airlines’ median EBITDA margin was 15.1%, which is well above its 10-year average of less than 10%. Fuel costs also weigh heavily on road transport, which are dominated by micro-enterprises that are almost exclusively dependent on diesel.
However, the relief from lower fuel prices may be partly offset by the accelerating green energy transition. As environmental regulations are gaining traction globally, new EU requirements are pushing the sector toward costlier alternative fuels. In road transport, more EU countries such as the Netherlands and Romania are set to implement CO?-based truck tolling in 2026, thereby increasing costs for high-emission vehicles. In aviation, the RefuelEU regulation, which has been in effect since 2025, requires a rising share of sustainable aviation fuels (SAFs) for all flights departing from EU airports. Maritime transport is also being affected: the regulation imposes a gradual reduction in the greenhouse gas intensity of fuels used by ships over 5,000 gross tonnages docking at European ports. China, which is also committed to reducing emissions generated by its maritime transport sector, requires major ports in the country to install shore power systems. At the global level, the shipping industry may face restrictions under the World Maritime Organization’s Net-Zero Framework. If it is adopted, the framework plans to introduce a carbon pricing mechanism for ships to be applied from March 2028 at the earliest. The vote, which was initially scheduled for October 2025, was postponed for one year following pressure from the US.
In addition to rising fuel costs, compliance with these environmental regulations requires carriers to make substantial investments in fleet renewals, as well as implement infrastructure upgrades.
Sea carriers set to grapple with lower freight rates
The 2025 series of tariff announcements sparked volatility in sea freight rates. The most notable spike occurred in June 2025 when global shipping rates jumped by 42% from the previous month according to the Drewry World Container Index, just ahead of the anticipated end of the Liberation Day tariff pause on 9 July. Despite this temporary surge, freight rates continued their downtrend compared to the previous year. Over the first semester of 2025, the same index was 23% lower than the year-earlier period. The decline contributed to a softening of shipping companies’ margins: among globally listed firms, the sector’s median EBITDA margin fell to 26.2% in H1 2025, down from 28.1% a year earlier. While uncertainty surrounding US tariff policy continues to be high, the expected slowdown in merchandise trade in 2026 should further exert downward pressure on shipping rates, especially as the industry grapples with overcapacity.
The impact of the rivalry between the US and China on shipping has gone beyond a question of tariffs. On 14 October 2025, the US administration imposed port service charges on Chinese vessels calling at its ports. These fees were justified by growing concerns over China's increasingly dominant position in the global shipbuilding industry, in contrast with the long-term decline of US shipyards. China increased its share of global shipbuilding tonnage from 5% in 1999 to over 50% in 2024. On the same day, China took retaliatory action and introduced similar fees on US-affiliated vessels entering Chinese ports. A couple of weeks later, the fees were suspended for a year. If reintroduced in their previous form, the US fees would have a more pronounced impact as they affect a substantial portion of US maritime trade. According to the international shipping association BIMCO, 16% and 24% of US combined bulk, tanker and container sea imports and exports respectively could be subject to the charge. While the reintroduction of these fees may trigger short-term volatility in freight rates, their long-term impact is likely to be moderate.
In another geopolitical arena, the ceasefire signed in October 2025 between Israel and Hamas may ease disruptions to maritime traffic in the Red Sea and the Arabian Sea. Since end of 2023, the Houthis, who are aligned with Hamas, have targeted commercial vessels passing through these waters and forced carriers to reroute via the Cape of Good Hope. In the event that confidence returns with a durable ceasefire enabling carriers to resume their passage through the Suez Canal, the temporary absorption of shipping capacity caused by longer detours between Europe and Asia will be reversed. Transit distances had increased by up to 30% on routes such as Shanghai–Rotterdam as a result of not using the Suez Canal. A return to the status quo would place further downward pressure on rates.
The bleak outlook on rates coupled with prevailing uncertainty have caused sea carriers to be reluctant about passing orders to shipyards. According to Clarksons Research, new global orders (in tonnes) decreased by 48% year-on-year in the first half of 2025. The Chinese shipbuilding industry was particularly affected, most likely as a result of the above-mentioned US fees on Chinese vessels.
Persistent supply chain challenges in air transport
Passenger and cargo volumes posted double-digit growth and reached record levels in 2024. The uptrend continued in 2025, albeit at a slower pace. During the first eight months of the year, global passenger traffic grew by 5% year-on-year, while air cargo volumes increased by 3.3%. Looking ahead to 2026, the cargo segment may encounter headwinds owing to the phase-out of customs exemptions for low-value parcels in key markets. In the US, a new law introduced in July 2025 removed duty-free status for shipments valued under USD 800 originating from China. From October, broader restrictions were applied to small parcels, regardless of their origin. The EU is expected to implement a similar measure in early 2026 for parcels under EUR 150. These policy shifts could damp cross-border e-commerce volumes, which mostly previously relied on air transport (around 80%).
Following the slowdown observed in 2025, air passenger growth is expected to remain resilient over the coming years. While environmental concerns among consumers and tougher legislation continue to weigh on the European market, strong demographics and rising household incomes in emerging markets are set to shore up sustained demand for air travel.
Although an increase in air capacity has supported air transport growth, supply chain challenges have curbed expansion. Despite improvements compared to the 2021-2023 period, original equipment manufacturers (OEMs) are still grappling with qualified labour shortages and delays in material and component procurement. Simultaneously, aircraft engine suppliers have been forced to contend with quality and sustainability issues on parts. Furthermore, Boeing’s own setbacks have added to the strain, with the Federal Aviation Administration (FAA) imposing limits on its production cadence due to safety and compliance concerns. As at the end of September 2025, Airbus would need 14.2 years at the H1 2025 production rate to clear its backlog, while Boeing would require 11.7 years to clear its own. In addition to curbing airlines’ expansion capacity, these supply chain issues have driven up costs. Delays in the delivery of aircraft parts and components have increased maintenance costs owing to the spike in the prices of parts, prolonged downtime and slower fleet renewal. The ageing of airline fleets – the average age of global fleet reached a record 15 years in 2024, compared to 13 in 2019 – has also contributed to higher fuel consumption.
Last updated: October 2025
Transports
