The global air freight industry, often described as the lifeblood of international trade, faces unprecedented challenges as escalating trade tensions and tariff policies create waves of uncertainty across supply chains.
Market Volatility in the Wake of New Tariffs
Recent tariff escalations by the U.S. administration have sent shockwaves through air cargo markets, with Xeneta's March 6 report revealing significant disruptions. Freight forwarders are delaying major capacity agreements, while shippers increasingly favor short-term contracts to maintain flexibility. The traditional annual contract negotiation cycle, typically scheduled for Q2 2025, has been postponed as market participants adopt a wait-and-see approach.
Carriers are responding with strategic adjustments, evaluating fleet deployments and summer schedules to mitigate potential impacts. Several airlines are reportedly shifting capacity from Chinese routes to Southeast Asian markets or reallocating assets to transatlantic operations.
Tariff Pressures Intensify
The latest 10% tariff increase on Chinese imports, following a similar hike in February, has placed particular strain on U.S.-China trade lanes. Additional threats of universal reciprocal tariffs scheduled for April implementation have compounded market anxieties, creating what industry analysts describe as a "sword of Damocles" effect on supply chain planning.
Xeneta's Chief Airfreight Officer Niall van de Wouw noted: "Our data shows shippers adopting divergent strategies—some actively seeking workarounds to minimize tariff impacts, while others anticipate potential airfreight rate reductions if e-commerce volumes continue softening."
E-Commerce Slowdown Signals Market Shift
The air cargo sector's recent growth engine—explosive e-commerce demand—shows signs of weakening. Seasonal demand fluctuations combined with potential U.S. regulatory changes to China's de minimis exemption suggest political factors may be influencing market dynamics.
"E-commerce has been the airfreight market's saving grace during periods of weak general cargo demand," van de Wouw observed. "Any significant disruption to this segment would have profound implications for global rate structures."
Shanghai Rates Plummet as Trade Patterns Shift
Xeneta data reveals a 29% month-over-month decline in Shanghai-U.S. spot rates to $3.23/kg in February, compared with just a 2% decrease on Shanghai-Europe lanes. This disproportionate impact reflects how trade tensions are reshaping regional air cargo flows.
The report suggests Shanghai's recent prominence as an e-commerce hub—emerging when Hong Kong and Southern China markets became congested—may be reversing as capacity rebalances. "Shanghai will likely be the first market to feel these adjustments," van de Wouw commented.
Potential Modal Shift from Ocean to Air
Proposed U.S. port fees on Chinese-built vessels could temporarily elevate ocean container rates, potentially triggering some modal shift to airfreight for time-sensitive, high-value goods. However, analysts caution that such transitions require careful cost-benefit analysis given air cargo's premium pricing structure.
Strategic Responses for Supply Chain Resilience
Industry experts recommend several measures to navigate current uncertainties:
- Diversifying supply chains across multiple regions
- Implementing advanced inventory management systems
- Conducting comprehensive risk assessments
- Leveraging digital technologies for enhanced visibility
- Engaging specialized logistics consultants
As trade policies continue evolving, air cargo stakeholders must balance short-term adaptability with long-term strategic planning to maintain their crucial role in global commerce.