Kiln dried is more useful for internal joinery (and certain timber) as it gets the moisture content down to around 10% so there will be (should be) no shrinkage when the timber settles in the internal environment.
Air dried however may get the timber down to 20-30% which is what it would be anyway when fitted externally. As long as it has been properly dried for the recommended time period - which reputable suppliers could be expected to do,. Also it should be kept in the dry if stored on site for a while.
Other factors are whether you choose the more knotty variety (knots may fall out with further shrinkage), and some suppliers say that they can machine a better finish on kiln dried timber - but I don't know if that's a real issue.
There are general recommendations for timber cladding to be optimally fitted in late summer early august, as it it then it minimises shrinkage issues. However, cedar is very dimensionally stable and the tongue and grooves have sufficient tolerance to prevent the laps opening up or cupping from expansion.