Air cargo volumes may drop sharply as Trump ends de minimis: Xeneta

E-commerce volumes, for so long the saviour of global air cargo demand, are facing up to the ‘seismic shock’ of the United States’ Liberation Day global tariffs announcement, according to the latest update from Xeneta.

"The general cargo market is also re-evaluating its future as shippers, forwarders, airlines and consumers come to terms with the economic reality of new import taxes and a potential international trade war."

U.S. President Donald Trump confirmed the elimination of duty–free de minimis treatment for low-value imports from China and Hong Kong, starting May 2, 2025. "All relevant postal items valued at or under $800 previously qualifying for the de minimis exemption will become subject to a duty rate of either 30 percent of their value or $25 per item (increasing to $50 per item after June 1, 2025)."

The announcement was one of many as President Trump imposed sweeping global import taxes on goods into the United States from April 9, 2025, the update added.

"In my 30 years working in the air freight industry, I cannot remember any other unilateral trade policy decision with the potential to have such a profound impact on the market at a global level," says Niall van de Wouw, Chief Airfreight Officer, Xeneta. "E-commerce has been the main driver behind air cargo demand. If you suddenly and dramatically remove the oxygen from that demand, it will cause a seismic shock to the market."

China-to-U.S. e-commerce shipments alone account for roughly half of the cargo capacity on this eastbound corridor and around six percent of global air freight demand. A disruption to this demand will free up a significant part of this corridor’s cargo capacity and spread its impact to the rest of the market, van de Wouw added.

New air cargo market data for March clearly indicated shippers and forwarders were ‘hedging their bets’ and buying time before making longer-term commitments to air cargo capacity as they waited to see how the impact of newly-imposed tariffs and international trade tensions unfolded. March showed no drastic signs of panic as demand rose +five percent year-on-year against a strong comparison 12 months ago, the update added.

The economic fallout is now likely to place further pressure on airfreight rates. Global air cargo spot rates in March continued their levelling out trend seen over the past year, increasing at their lowest pace since June 2024 at +six percent year-on-year, , the update added.

"With the growth of rates slowing overall, we’d normally expect to see shippers making longer capacity commitments to achieve more competitive rates but, right now, this is clearly a gamble few shippers are ready to take – and this is before we’re even seeing tariffs impacting volumes,” says van de Wouw. "Considering the economic tensions between the U.S. and its international trading partners, the hesitance is understandable and the Liberation Day statement by U.S. President Trump will take this to a level we haven’t seen before. As companies come to terms with the impact of U.S. tariffs and we await the global response, shippers simply don’t yet know what they’re up against. If they agree to a plan for the year now, it could turn out to be much costlier in the longer-term."

The impact on e-commerce volumes carried by air into the U.S. will not only mean higher prices for consumers, it also raises the prospect of increased border congestion given the sudden and dramatic increase in shipments needing to be processed by U.S. Customs and Border protection, the update added. "The US Department of Commerce attempted to allay these concerns by stating it has adequate systems in place to collect additional tariff revenue on the four million de minimis shipments a day entering the U.S."

Global air cargo supply grew +two percent year-on-year in March, but still at a slower pace than global air cargo demand growth. With a combination of supply/demand rebalancing, the dynamic load factor stayed on par with last year at 60 percent. "There appears to be a fundamental shift in sentiment emerging in the consumer market in response to the potential chaos and added costs of tariffs being imposed on and by countries and trading blocs," says van de Wouw. "What happens if there is less passenger demand across the Atlantic this summer? Less passengers means less bags, which produces even more cargo capacity in the market. If passenger and cargo volumes feel an impact, the next step might be for airlines to downgrade or divert capacity."

E-commerce volumes still buoyant – but for how long?
In terms of regional developments, despite double-digit demand growth month-on-month in March, Northeast Asia to Europe spot rates were unchanged at $4.28 per kg as airlines allocated more capacity to the market, the update added. "Thanks to buoyant e-commerce demand during the month, the corridor’s spot rate increased +14 percent year-on-year. In contrast, the trade imbalance meant backhaul trade showed a two percent rate decline month-on-month and -14 percent year-on-year to $1.37 per kg."

The Northeast Asia to North America market showed a noticeable spot rate increase of +nine percent month-on-month to $4.17 per kg, "undoubtedly driven by the temporary removal of the de minims threshold for Chinese shipments in early February. Similar to the Europe to Northeast Asia corridor, the North America to Northeast Asia market showed a slight decline of one percent month-on-month and a considerable -20 percent reduction year-on-year."

Is March demand growth the ‘calm before the storm’?
van de Wouw says market anxiety and uncertainty is not good for anyone: producers, consumers, airlines or forwarders. "It’s a crazy environment, left and right. No one is benefitting from this situation because it’s impossible to plan effectively against a moving target. Clearly, everyone will be waiting to see how the removal of the de minimis threshold and all the global tariffs already announced and those still to come will impact trade, as well as how quickly there will be less demand and, consequently, less airfreight. It’s all expectations right now, but we must expect the situation will get worse before it gets better.”