{"id":183601,"date":"2025-05-02T15:00:13","date_gmt":"2025-05-02T14:00:13","guid":{"rendered":"https:\/\/www.aviationbusinessnews.com\/?p=183601"},"modified":"2025-05-06T16:50:57","modified_gmt":"2025-05-06T15:50:57","slug":"how-bad-will-it-get-air-cargo-market-awaits-impact-of-tariffs-and-de-minimis-changes","status":"publish","type":"post","link":"https:\/\/www.aviationbusinessnews.com\/cargo\/cargo-interviews-comments-articles\/how-bad-will-it-get-air-cargo-market-awaits-impact-of-tariffs-and-de-minimis-changes\/","title":{"rendered":"‘How bad will it get?’: Air cargo market awaits impact of tariffs and de minimis changes"},"content":{"rendered":"

Global air cargo volumes grew +4% year-on-year in April but with today\u2019s (2 May 2025) removal of the de minimis threshold for shipments from China into the United States expected to dramatically disrupt e-commerce volumes in the coming weeks and massive uncertainty hanging over the macroeconomic outlook, the question for the air cargo market in 2025 has become \u2018how bad will it be?\u2019, according to industry analysts Xeneta.<\/em><\/h4>\n

Over the past 10 years, US consumers have paid no duty on shipments valued at $800 or less, causing the volume of cross-border packages into the US to soar to some 1.35 billion annually. Similar (but lower) exemptions exist in other countries. From today (2 May 2025), however, low-value products sourced from China and Hong Kong into the US will now be subject to 145% new tariffs, with products sourced from postal services paying a different 120% duty on the value of the goods or a $100 flat fee, rising to $200 on 1 June 2025.<\/p>\n

Approximately 50% of air cargo shipments on the China\u2013US route is e-commerce, accounting for around 6% of global volumes. A sharp drop in demand is likely to challenge carriers’ capacity planning, with early signs already pointing to freighter flight cancellations and potential redeployments to other trade lanes.<\/p>\n

One of China\u2019s e-commerce behemoths, Temu, has already responded by dramatically reducing its advertising spend in the US, but the outlook for global air cargo \u2013 so dependent on e-commerce income for the last 2-3 years since covid \u2013 extends far beyond the US border, says Niall van de Wouw, Xeneta\u2019s chief airfreight officer.<\/p>\n

\u201cThis is a double-edged sword. A decrease in demand on one of the key air freight lanes between Asia Pacific and North America will have a big impact, but so too will the redeployment of capacity on a global level,\u201d he said.<\/p>\n

\u201cThis may be a year when we grow weary of seeing the word \u2018unprecedented\u2019 in market performance statements. The macroeconomic picture will depend on how long the uncertainty lasts and what will be at the end of it, but the outlook currently looks quite daunting.<\/p>\n

\u201cThis is not about one industry being affected. This is about major trade lanes being affected, and we haven\u2019t seen anything on this scale before,\u201d van de Wouw added.<\/p>\n

Weaker market demand in April and downward pressure on rates<\/h5>\n

In April, global air cargo spot rates rose just +3% year-on-year, a second consecutive month of only a single-digit increase. This slowdown aligns with weaker demand trends. Adding to the downward pressure on rates, jet fuel prices fell -24% year-on-year in the first three weeks of April. This drop, driven by ongoing economic and geopolitical uncertainties, likely played a role in tempering overall spot rate growth.<\/p>\n

Meanwhile, available capacity increased modestly, up +3% compared to April 2024, and the dynamic load factor declined three percentage points month-on-month to 57%. Dynamic load factor is Xeneta\u2019s measurement of capacity utilisation based on volume and weight of cargo flown alongside available capacity.<\/p>\n

US tariff measures implemented on the country\u2019s so-called Liberation Day on 2 April 2025 prompted a rush of air shipments from several Asian countries to North America. This led to double-digit increases in both volume and spot rates. Notably, spot rates from Southeast Asia to North America jumped +13% month-on-month, while those from Northeast Asia rose +10%. However, these gains began reversing in the second half of April following the announcement of a 90-day tariff pause and +145% retaliatory tariffs on China.<\/p>\n

This article continues after the below picture…<\/em><\/p>\n

\"In<\/a><\/figure>\n

The largest monthly rate surge was observed on the North America\u2013Northeast Asia corridor, rising +14%. This was largely driven by shippers rushing exports to China and Hong Kong amid fears of reciprocal tariffs.<\/p>\n

Elsewhere, spot rates between the Middle East & Central Asia and Europe remained flat month-on-month but were down especially into Europe (-26%) year-on-year, reflecting easing supply pressures from earlier Red Sea disruptions. Transatlantic westbound rates, meanwhile, declined -7% from March, impacted by increased belly-hold capacity from summer flight schedules, as well as seasonal slowdowns during the Easter holidays and potential US tariff actions.<\/p>\n

On the Northeast Asia\u2013Europe corridor, fronthaul rates into Europe saw a slight month-on-month increase and were up +10% year-on-year. However, backhaul rates into Northeast Asia fell sharply, down -17% compared to April 2024, as trade imbalances persisted.<\/p>\n

Waiting to see how bad it gets<\/strong><\/p>\n

April\u2019s market data failed to provide many indicators for the year because the uncertainly since the start of the month was just \u2018pushed back,\u201d van de Wouw said.<\/p>\n

\u201cNothing has really changed in the past month. The global air cargo market is in an intermediate state. It\u2019s very difficult for companies to relocate their sourcing to avoid tariffs, but they are looking at ways to reduce the impact, still not knowing what the final impact might be. The big question for everyone is what will this year do?<\/p>\n

\u201cThe de minimis change in the US is going to disrupt the market and we\u2019ll see its impact in the May numbers. I would say be prepared for a logistical mess.<\/p>\n

\u201cI wonder how many US consumers are aware there was a de minimis rule and that now it has been revoked. But that\u2019s about to change. One industry colleague from Cirrus Global Advisors in the US posted earlier this week that the \u2018best-selling\u2019 item from China, a $19.49 power surge protector, was $48.38 in his Temu shopping basket by the time shipping and import taxes had been added. His message, quite correctly, is that the days of free shipping from China are over,\u201d van de Wouw continued.<\/p>\n

After double-digit air cargo market demand growth in 2024, forecasts going into 2025 predicted another 4-6% growth year-on-year. Any attempts to reassess the outlook in the current market conditions would be \u201cmeaningless,\u201d he said.<\/p>\n

This article continues after the below picture…<\/em><\/p>\n

\"US<\/a><\/figure>\n

Will tariffs stick?<\/strong><\/p>\n

\u201cThe likelihood of lower air freight rates are better news for shippers and forwarders but if shippers can\u2019t sell their goods because of tariffs, that\u2019s bad news for the macroeconomic picture and the need for airfreight. For most airfreight shipments, lower rates will not compensate for the tariffs that will have to be paid.<\/p>\n

\u201cTherefore, it\u2019s still a waiting game to see how long this process takes and the order of magnitude of which the tariffs will stick,\u201d van de Wouw stated.<\/p>\n

Right now, he added, all eyes are on e-commerce.<\/p>\n

\u201cThis is quite likely the calm before the storm. If the new de minimis set-up remains – and why would they change it after the investment the authorities have reportedly made – then this will undoubtedly negatively impact airfreight volumes from China to the US. The traditional air freight market will not be able to compensate for the decline in e-commerce volumes.<\/p>\n

“Airlines will adjust their networks to this new reality and this, in turn, will have a beneficial impact for shippers around the world as they will see more capacity coming (back) to their market – but they still need viable trading conditions to enjoy the benefit of this opportunity.\u201d<\/p>\n

This article was provided by Xeneta<\/a>.<\/em><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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