15 August 2025, Friday
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Transpacific air cargo operators are struggling to adjust capacity as demand shifts following a surge in pre-tariff shipments, reports New York's Journal of Commerce.
Air cargo carriers are facing a challenge in rebalancing capacity across trade lanes after a July surge in shipments ahead of sweeping US tariffs. The spike in demand was driven by importers frontloading inventory before the August tariff rollout.
CH Robinson said in a market update that carriers increased capacity in July, but inventory building ended earlier than expected, leaving airlines with excess space. Asian carriers were particularly affected, as the traditional peak season was disrupted by shifting trade deal deadlines.
Airlines had reduced flights and reallocated aircraft expecting lower demand after 9 July, but extensions to 1 August and 14 August for China left carriers with mismatched capacity.
Contrary to the usual summer lull, global air cargo volume rose five per cent in July following a 1 per cent gain in June, according to Xeneta. Chief analyst Niall van der Wouw said the growth was driven by tariff-related frontloading and mode shifts, not increased trade.
Despite higher volumes, trans-Pacific air freight rates weakened. Spot rates from Southeast Asia to North America fell 16 per cent year-on-year to $4.87/kg, while rates from Northeast Asia remained flat at $4.81/kg. Taiwan saw a nine per cent rise to $6.85/kg amid strong demand for AI and semiconductors.
Rates from China dropped 11 per cent to $4.26/kg, impacted by the loss of duty-free access for low-value imports and heightened tariffs.
E-commerce remains a key driver, accounting for over half of Hong Kong's air cargo in early 2025, said Cathay Pacific CEO Lam Siu Por. However, China's e-commerce exports to the US fell 44 per cent in July, while exports to other countries rose nearly 50 per cent.
Xeneta data shows China-to-Europe e-commerce volumes rose 90 per cent year-on-year in June, supported by a shift in capacity away from the tariff-hit transpacific corridor.
Air cargo operators now face further disruption from President Mr Donald Trump's executive order extending the US de minimis ban to all trading partners from 29 August.
Under the new rules, international postal shipments will be subject to tariffs of US$80, $160, or $200 per item depending on the country's reciprocal tariff rate.
Glyn Hughes, director-general of The International Air Cargo Association, said the change will add cost and complexity to low-value shipments, which previously fell under the $800 exemption. He estimated over 1.2 billion shipments were affected in 2024.
"We can expect demand to suffer, and markets will continue to shift," Mr Hughes said.
