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China-to-US Air Cargo Falls Off a Cliff as Tariffs Spur Charter Cancellations
Glenn Taylor
4 min read
E-commerce air cargo shipments from China to the U.S. since mid-April have dropped roughly 50 percent compared to the same two-week period last year, as tariff escalation and the looming end of the duty-free de minimis provision for Chinese imports have led to the cancellation of some charter services.
Further cancellations of freighter charters are expected in the coming weeks, according to a May Asia-Pacific air freight outlook from international freight forwarder Dimerco Express Group.
“Since around April 20, charter flights from China to the U.S. have been significantly reduced—many were either cancelled or re-routed,” said Kathy Liu, vice president, global sales and marketing, Dimerco Express Group, in a statement. “A lot of that capacity has shifted to destinations like Nuevo Laredo in Mexico and other parts of Latin America, where demand has actually gone up, especially out of Mexico.”
The report said that air carriers including Air China, China Cargo Airline and China Southern Airlines are among those planning to cancel freighter services between China and the U.S. If these cancellations go through, shrinking capacity from China to the U.S. will be further reduced.
With the suspension of the de minimis exemption, retailers with China-heavy supply chains including Temu, Shein and AliExpress will have to pay taxes on all direct-to-consumer packages they ship to the U.S. that carry less than $800 in value. This has caused a current drop in air freight demand as companies figure out their tariff strategy. Temu and Shein already have had to adjust by increasing prices, but not every company can afford that luxury.
“For shipments to the U.S., a lot of shippers have hit pause. With the uncertainty around new tariffs between the U.S. and China, many are holding back on placing new orders,” Liu said. “But what’s interesting is that demand out of Southeast Asia and Taiwan has stayed relatively stable. That’s likely due to the 90-day tariff exemption granted by the U.S. government, which is giving some breathing room to shippers in those regions.”
Another air freight tracker, WorldACD, said that air cargo volumes from China and Hong Kong to the U.S. have fallen for four weeks, with the week ending April 20 dropping by 7 percent compared with a week earlier.
On an annual basis, China/Hong Kong-to-U.S. combined air cargo traffic declined 16 percent. These figures do not include charter activity, WorldACD said.
In line with Liu’s comments, certain markets like Vietnam (42 percent), Taiwan (30 pecent) and Thailand (24 percent) saw volumes increase during the week as exports out of those countries accelerated.
As U.S. shippers continued to front-load imports ahead of the Trump tariffs earlier this year, air freight volumes bumped back up in March after a rare year-over-year contraction in February.
Global air cargo volumes reached their highest March peak ever, extending to nearly 24 billion cargo-tonne-kilometers (CTKs), a 4.4 percent increase from last year’s demand, according to the International Air Transport Association (IATA).
“March cargo volumes were strong. It is possible that this is partly a front-loading of demand as some businesses tried to beat the well-telegraphed April 2 tariff announcement by the Trump administration,” said Willie Walsh, director general of the IATA, in a statement. “The uncertainty over how much of the April 2 proposals will be implemented may eventually weigh on trade.”
The IATA cautioned that March volumes typically rise after a lull in February, and this single-digit increase is in line with pre-Covid growth trends. Air shipments increased by a seasonally adjusted 3.2 percent from February to March.
In line with the pulling forward of goods out of China, Asia-Pacific airlines saw 9.6 percent year-on-year demand growth for air cargo in March, the strongest growth among the regions.
Air cargo rates spiked by 3.8 percent in March and 6.6 percent from February, ending a three-month streak of monthly yield declines that lasted through February.
Based on previously published data from WorldACD, when Asia-Pacific-to-U.S. rates jumped 10 percent on a two-week basis to end March, the trans-Pacific trade lane likely buoyed global air freight rates. Pricing on the route dropped 8 percent in the most recent week to April 20, following seven consecutive weeks of rate increases since Lunar New Year.
The March global rate increase calculated by IATA moved inverse to that of jet fuel costs, which have dropped by 17.3 percent year over year, marking nine straight months of yearly decline.
“In the meantime, the lower fuel costs—which are also a result of the same uncertainty—are a short-term positive factor for air cargo,” Walsh said. “And, within the temporary pause on implementation we hope that political leaders will be able to shift trade tensions to reliable agreements that can restore confidence in global supply chains.”
