Sector Economic Insights
Uneven performance amid modest trade growth
After contracting in 2023, global good trade returned to growth in 2024, having increased by 2.7% in volume. However, the recovery’s effect was uneven across transport segments. Air (both cargo and passenger) and sea rebounded strongly. Coupled with capacity constraints, it supported solid price increases. Road and rail transport turned in a more subdued performance.
In 2025, merchandise trade volumes are expected to grow by 3%, which is below historical growth trends (4% on average over 2000-2019). Risks, notably of tougher trade protectionism policies, could result in slower-than-expected trade expansion.
Regionally, transportation activity may see some improvement in Europe after declining trade flows in 2024 in exports and imports alike. However, weak manufacturing and household consumption trends rule out any major rebound. The European trucking sector, which has been struggling in recent years, should remain under pressure. Despite a possible slowdown in the pace of economic activity, US growth is set to remain upbeat, thus fuelling transport activity. However, this is unlikely to halt the long-term slowdown in rail transportation. In the wake of an average annual drop of 1.6% since 2005, it shrank by 3.2% in 2024. Trump’s return as US President may further harm the trend given his past opposition to public transit and high-speed rail projects. Instead, his willingness to deregulate and weaken environmental requirements may favour more polluting forms of transport, notably trucking. In Asia, freight transport continues to be supported by robust exports, while the continued expansion of the middle classes is poised to boost domestic and regional travel.
Mixed trends for energy costs
Transport businesses are set to benefit from moderate crude oil prices. Coface forecasts an average price of $70-75 per barrel in 2025, down from $80 in 2024. Alongside slower wage growth, this should help contain operating costs. The impact will be particularly significant for airlines for which fuel (mainly kerosene) accounts for around 30% of their total costs. The share may also be high in road transport, which is dominated by micro-enterprises that depend almost exclusively on diesel.
The decrease in fuel costs associated with moderating oil prices may be limited by the energy transition. While environmental regulations have emerged worldwide, new requirements in the EU are pushing the sector further towards costlier alternative fuels. Additional EU countries (e.g., Luxembourg and the Netherlands) are due to implement CO2-based truck tolling in 2025. Meanwhile, the RefuelEU regulation requires a higher share of sustainable aviation fuels (SAFs) for flights within, to, and from the EU as of this year. It also obliges vessels above 5000 gross tonnes calling at European ports to reduce the greenhouse gas intensity of the energy used on board. In addition to higher fuel costs, compliance will mean that significant investments in fleet renewal for carriers will have to be made, as well as infrastructure upgrades at airports and ports.
Air transport facing persistent supply chain challenges
Air capacity grew in 2024, which helped air transport to reach record levels. Nevertheless, aircraft supply chain challenges restricted the expansion of said capacity. Since the pandemic, original equipment manufacturers (OEMs) have struggled with labour and input shortages, as well as reduced productivity. Simultaneously, aircraft engine suppliers have faced quality and sustainability problems for parts. Down the supply chain, Boeing has continued to struggle with flight incidents, persistent quality control problems and a labour strike. This environment has played a part in aircraft delivery delays. As at the end of 2024, Airbus would need 11.4 years at the 2024 production rate to clear its backlog, while Boeing would require 18.1 years. In addition to curbing capacity growth, these problems are driving up airlines’ costs. Delays in the delivery of aircraft parts and components have increased maintenance costs on back of prolonged downtime and slower fleet renewal. The ageing of aircraft fleets also causes higher fuel consumption.
The situation contrasts with the shipbuilding industry. As for aircraft, order books have grown as a result of increased activity and the need for less polluting vessels. In 2024, shipbuilding orders were the highest in 17 years. In spite of this, the order backlog at leading shipyards remained at three to four years of production, mostly thanks to expanding shipbuilding capacity in China after closed yards reopened. The country dominates the industry, accounting for more than half of vessel output and almost two-thirds of new orders in 2024 (by tonnage). China’s dominance prompted an investigation by the US into Chinese industrial practices. Concluded in early 2025, the investigation found that Chinese subsidies gave the nation's shipbuilding industry unfair advantages, paving the way for possible US tariffs. The impact on the Chinese shipbuilding industry would be negligible as US buyers constitute only a minor share of new orders received.
Geopolitics likely to continue impacting transport
Geopolitics has weighed on transport operations and costs in recent years. Air transport has been impacted by Russia’s invasion of Ukraine, prompting EU and UK flight bans on Russian aircraft. In retaliation, Russia closed its airspace to most Western airlines, forcing carriers onto longer, costlier West Asian routes. Unlike many of their Asian competitors, allowed to fly over Russia and therefore able to maintain stable prices, some Western airlines have scaled back operations to Asia.
Maritime transport has also faced disruptions as Houthi attacks in the Red Sea and Arabian Sea have forced carriers to reroute via the Cape of Good Hope. The longer Europe-Asia journeys (+30% for Shanghai-Rotterdam) have caused vessel delays and congestion. With carriers able to pass on costs to customers – the Drewry World Container Index (DWCI), which tracks the freight rates for 40-foot containers on eight major East-West maritime routes, climbed by 137% in 2024 – profit margins have improved.
The January 2025 ceasefire between Israel and Hamas may ease disruptions. Following the announcement, the Houthis pledged to limit attacks to ships affiliated to Israel until all ceasefire phases are fully implemented. However, risks persist in the Red Sea against the backdrop of a fragile ceasefire. This, together with financial incentives for carriers to bypass the Suez Canal, suggests that a normalisation of shipping flows may be slow. Moreover, a return to the zone could initially increase congestion and freight rates. In the long term, however, normalisation of traffic would bring rates down. In January 2025, the DWCI was still at 65% of its January 2023 level.
Transports