Volumes of 11% in October and spot rates of 19% YoY reflected maturity among buyers and sellers of capacity, as per latest market data by Xeneta. Lower cargo demand growth in January was not because of tariff levies by US President Trump, but Lunar New Year, says Niall van de Wouw, Chief Airfreight Officer.
CT Bureau
This year began with lower-than-expected growth in global air cargo demand in January of little over 2 per cent year-on-year compared to the double-digit monthly increases throughout last year but fears of a trade war over tariffs impacting volumes and growth forecasts for the year are premature, say industry analyst Xeneta.
January’s data was impacted by the earlier Lunar New Year reducing volumes out of China, but the big drop in demand came as quite a surprise, Niall van de Wouw, Chief Airfreight Officer, Xeneta, said.
However, he sees no immediate reason to change Xeneta’s +4-6 per cent growth forecast for global air cargo in 2025 despite the market’s nervousness over new tariffs introduced by the USA, particularly on China and their subsequent retaliation.
“The lower growth in air cargo demand in January was not because of President Trump, nor, entirely due to earlier Lunar New Year. It also compares to an unusually high comparison in January 2024,” van de Wouw said.
“Nonetheless, the air cargo market is entering a period of uncertainty, which makes planning extremely challenging. The implementation of tariffs by the Trump administration and the responses of China, Canada, and Mexico are just the start of a negotiation. It is all transactional. We could well end up in a global trade war, but in the case of President Trump, we have someone who is ready to negotiate everything, and the rest of the world can influence the outcome, as we have already seen. The consistency here is he is looking for a deal,” van de Wouw said.
“We don’t know what will happen, but we do understand that uncertainty is not good for trade confidence, and it does not help investment. People like to see some kind of stability before they put their money down,” he added. “If I was a shipper, I would not be rushing to make too many plans or take any drastic measures. I would have my team ready to do things differently and wait to see what happens because there is a lot of sabre rattling and noise, but little clarity.”
E-commerce sustainable?
Cross-border e-commerce demand was one of the main pillars fuelling global growth in air cargo volumes since Q3 2023. Is this now at risk? In 2024, China cross-border e-commerce shipments to the USA accounted for 25 per cent of its total global sales and filled over 50 per cent of cargo capacity from China to the USA.
Suspension of the de minimis exemption could, therefore, have a profound impact on air freight capacity between China and the USA and beyond by prohibiting these import shipments from de minimis entry, increasing costs, and adding time-consuming entry filing requirements and potential customs delays.
“E-commerce volumes out of China grew +20-30 per cent last year, following similar growth in 2023, so it is going to take a sledgehammer to crack that level of consumer demand, and I am not sure blocking de minimis alone is enough. China e-commerce was not set up to take advantage of de minimis loopholes—it has taken advantage of consumer demand for cheap, fast goods,” Van de Wouw said. “E-commerce products may be slightly more expensive if de minimis is removed, but they will still be cheaper than buying through retailers in the US – but delays in receiving the goods due to operational disruptions could have a bigger impact than price because it takes away the attractiveness for consumers,” he added.
China’s e-commerce giants knew this day would come and will not allow a business model on this scale to collapse due to de minimis, van de Wouw said. “Even if de minimis is being blocked, the e-commerce retailers will keep selling and shipping the goods. There may not be a significant impact on air freight rates in the short term in this scenario, even if it causes chaos at the receiving airport in the USA.”
In the longer term, demand for e-commerce—and therefore freight rates—will be impacted if the consumer feels the cheap price is not worth it if they face a longer wait to receive their goods. “In this scenario, we would expect to see a major downward impact on freight rates at a global level, but to predict this now would be to ‘cry wolf’. Let us wait and see. Maybe nothing changes,” he said.
The winners of any muted growth in e-commerce volumes will be general freight shippers globally as capacity is deployed elsewhere, placing a downward pressure on rates in these new markets. But general air freight demand has recorded no real growth in recent years and there’s little expectation of any significant upturn in its fortunes in 2025, he cautioned.
Cargo Performance in January
Global air cargo chargeable weight in the first month of the year grew just 2 per cent year-on-year, influenced also by the diminishing impact of ocean shipping disruptions. As anticipated, global air cargo capacity showed a similarly modest growth of 2 per cent in January, lowering the dynamic load factor to 57 per cent in January, on par with a year ago. Dynamic load factor is Xeneta’s measurement of capacity utilisation based on volume and weight of cargo flown alongside available capacity.
Global air cargo spot rates in January remained 17 per cent higher than a year ago, reaching US$ 2.65 per kg and 56 per cent above pre-pandemic levels. These elevated rates can be attributed to the e-commerce boom, limited air cargo capacity from slow aircraft production, flight rerouting due to Russian airspace closure, and delayed adjustment of freight rates.
Month-on-month, January’s international air cargo spot rate fell 11 per cent, a slower decline compared to the same period a year ago (more than 13 per cent).
