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The first signs of the impact of stricter requirements around e-commerce were visible in February’s air cargo data, while the overall market continued to grow.
Figures released today by data provider Xeneta show that in February air cargo demand increased by 4% year on year, the dynamic load factor was flat at 59% and the average spot freight rate was up 10% to $2.53 per kg.
However, Xeneta chief airfreight officer Niall van de Wouw said that there was also a “taste of what’s to come” with stricter rules around e-commerce shipments when rates from Shanghai to the US fell by 29% month on month in February to $3.23 per kg.
Van de Wouw said that Shanghai was likely to be the origin to first see the impact of lower e-commerce volumes.
“Even allowing for the earlier Lunar New Year and the seasonal e-commerce slowdown at the start of the year, the fall in Shanghai-US spot rates, following the temporary removal of the de minimis exemption on Chinese shipments, may be one of the first indicators that the regulatory/political conversations are starting to affect the air cargo market,” he said.
“If a fall in e-commerce volumes means there’s currently more available capacity to do business out of Hong Kong and southern China again, we would expect Shanghai to be the first market to feel this impact, and that’s what we saw in February. This may be short-term, but the uncertainty around e-commerce is impacting the market.”
Demand expectations
Xeneta is expecting the market to grow 4.6% this year but warns changes to e-commerce rules and the addition of tariffs could have a negative impact on expectations.
“With general cargo demand in the doldrums in recent years, the surge in e-commerce has been the saviour of the air cargo market performance. If this now takes a significant hit, if that happens, it will have a profound effect on airfreight rates around the world,” van de Wouw said.
“From the conversations we are hearing, some shippers are clearly looking for ways to minimise the impact of US tariffs, while others will be anticipating lower airfreight rates if e-commerce volumes show a sustained dip.”
He added that other markets, such as Vietnam, may see prices rise if companies look to move away from China to avoid tariffs.
“Further complicating the matter is the proposed US port call fees on Chinese built ships, which could throw ocean shipping schedules into disarray, in the short-term driving up container freight rates and even prompting a shift from sea to air,” Xeneta said.
Looking ahead, Xeneta warned that airlines may look to switch capacity away from China to Southeast Asia or the transatlantic, freight forwarders will delay signing deals on block space agreements to see what happens with demand and pricing and shippers may opt for shorter deals in the first half of the year for the same reasons.
Van de Wouw said: “This is a situation completely outside of the control of the air cargo market and there’s a great deal of noise, which is adding to stakeholders’ anxiety. The issue is no one knows what the end game is and what’s going to happen from a regulatory perspective, and how this will impact consumer confidence.”
Source: Xeneta
Monthly slowdown
The 4% volume slowdown follows double-digit increases in every month of 2024, but is up on the 3% increase in January and reflects expectations of market growth of around 4-6% this year.
Removing the impact of the timing of the Lunar New Year holiday in Asia, Xeneta reckons the market grew by around 3% in January and February combined.
“In addition to the US de minimis change, other factors likely influencing the monthly performance included a high comparison base in 2024 and the diminishing impact of Red Sea disruptions on air cargo volumes, as supply chains continued to adapt to longer transit times,” the analyst said.
While spot market prices increased by 10%, the global seasonal rate (valid for longer than one month) dropped 1% year on year to $2.21 per kg, ”reflecting the market’s changing supply/demand dynamics”.
Northeast Asia to Europe spot rates were up 10% on a year ago to $4.32 per kg, while Northeast Asia to North America spot rates experienced the steepest month-on-month decline, dropping 17% to $3.79 per kg.
Spot rates from Europe to both Latin America and North America recorded high single-digit growth month on month, maintaining levels over 20% higher than a year ago.
”This elevated spot rate reflects limited passenger belly capacity during the winter flying season as well as freighter capacity shifting away from the corridor,” Xeneta said.
