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Global air cargo volumes jumped 5% year-on-year in July as more shippers opted for the speed of airfreight to skirt US tariffs
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This is according to the latest market analysis by Xeneta, which said market sentiment stayed subdued as tariff talks in Washington remain in flux
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The lack of clarity on US tariffs continued to cast a shadow over global trade flows, especially in the airfreight sector
Global air cargo volumes jumped 5% year-on-year in July as more shippers opted for the speed of airfreight to skirt US tariffs.
This is according to the latest market analysis by Xeneta, which said market sentiment stayed subdued as tariff talks in Washington remain in flux.
The latest deadline was set for August 7 for a broad range of trading partners.
Xeneta said the lack of clarity continued to cast a shadow over global trade flows, especially in the airfreight sector.
According to Xeneta’s Chief Airfreight Officer, Niall van de Wouw: “As we said earlier in the year, air cargo is piggybacking on the chaos being caused by tariffs. While the growth in July will come as a pleasant surprise to many, this growth is not a consequence of increased trade. It is a sign of the creative ways companies are trying to circumvent the higher costs of tariffs.”
July saw a notable upturn in global air cargo demand following a modest one percent gain in June. This unexpected boost, bucking seasonal patterns, appears driven in part by tariff-related frontloading, mode shift, and persistent uncertainty, prompting businesses to expedite shipments.
“What we are seeing currently is mode shift and that is helping the airfreight market in the short-term. If you’re trying to circumvent tariffs, you’re going to want to do it fast, and a plane is faster than a ship. Having goods in an ocean container for 30 days will feel like a very long time for a lot of businesses right now,” said Van de Wouw.
He added that businesses are getting creative to try to avoid or lessen the impact of tariffs. “It’s a game of ‘cat a mouse’ between the US administration and companies.”
Despite firmer fundamentals, global air cargo spot rates declined for a third straight month in July, falling two percent year-on-year to $2.55 per kg. Yet the rate of decline has eased, thanks to the resurfacing demand-supply imbalance.
A slight two percent month-on-month uptick in July offered a glimmer of relief to airlines, although the mid-term trajectory remains muted, stated Xeneta.
Further complications are on the horizon, with the US preparing to end the de minimis exemption for all countries by the end of August, a policy shift that could reshape small-parcel air trade. Since May 2, the exemption has already been removed for shipments from mainland China and Hong Kong, which collectively account for an estimated two-thirds of all de minimis parcels entering the US.
This resulted in a reported 50 percent decline in China’s low-value and e-commerce exports to the US in June.
The broader rollback will primarily affect Canada, the UK, and Mexico – countries that together make up most of the remaining one-third of affected volume.
Potential disruptions to US postal services – governed by international treaties – could add yet another layer of complexity, as reciprocal measures from foreign postal authorities remain a possibility.
While the lack of detail around tariffs is “creating a tremendous lot of headaches for people,” Van de Wouw acknowledged, it is, once again, pushing up airfreight volumes.
He said, ” circumventing is about responding quicker, anticipating something else, and being prepared to pay a little bit more for airfreight transportation because it is still better than paying a much higher tariff on goods.”
The continuing tariff uncertainty, he said, is “one of the few things that might protect air cargo demand in the coming months because hardly anything has been finalized in relation to tariffs. Businesses are seeing the news headlines and intentions, but not the details and commitments.”
Airfreight rates along the transpacific corridor weakened markedly in July. Spot rates from Southeast Asia to North America fell 16 percent year-on-year to $4.87 per kg, as earlier capacity constraints eased. In contrast, rates from Northeast Asia to North America remained relatively flat at $4.81 per kg, buoyed by robust demand out of Taiwan.
Mainland China, however, told a different story. Spot rates to the US declined by 11 percent to $4.26 per kg, weighed down by both the de minimis ban, heightened tariffs, and market uncertainty.
On Asia-Europe routes, spot rates from Northeast Asia to Europe held steady at $4.16 per kg. Yet beneath that calm surface lies a reshuffling of capacity: a notable shift of freighter capacity from the Pacific to Europe helped absorb a near 90 percent surge in cross-border e-commerce volumes from China to Europe. That reallocation has so far kept rates aloft.
By contrast, Southeast Asia to Europe fared less well, with spot rates tumbling 22 percent year-on-year to $3.02 per kg.
While this state of flux exists, air cargo gives shippers the opportunity to respond quicker.
“My best assessment is that the confusion is encouraging more companies to use airfreight than would like to, but air cargo is proving its value once again,” said Van de Wouw.
However, he also said, “the piggybacking will stop” – adding that all the positivity created by double-digit air cargo growth in 2024 “now feels like a very long time ago.”
“Economists agree this climate is not good for anyone and, sooner or later, something must give, and demand will fall. How long it will be before reality kicks in is hard to assess because this is one massive political dance. In the meantime, air cargo stands to benefit,” Van de Wouw concluded.
