Currently, airlines are evaluating their all-cargo operations strategies for the summer. Xeneta predicts that many airlines will shift air freight capacity from China to Southeast Asia or transfer capacity to transatlantic routes. Forwarders are delaying signing Block Space Agreements (BSA) and shippers are postponing annual contract negotiations, opting for short-term agreements instead, awaiting clearer market signals.

This view is supported by the Tac Index. Freight forwarders are reluctant to overcommit on certain specific routes and are redirecting volumes to alternative routes or shifting to sea freight. This could lead to short-term excess capacity in some regions for airlines, but with the emergence of new demand corridors (such as Southeast Asia to North America), another region may experience a capacity crunch.

Freightos has also observed the cancellation of all-cargo flights and a shift of more cargo to sea freight.

All three companies agree that the e-commerce boom is waning, particularly with a decline in cargo volumes from China to the United States.

According to Xeneta data, the spot rate from Shanghai to the U.S. in February dropped by 29% month-on-month to $3.23 per kilogram, while the rate to Europe fell by only 2% to $3.86 per kilogram. The decline in air freight prices to the U.S. may be the first sign that U.S. government tariff policies are beginning to affect air cargo.

The Tac Index reports a 10.54% drop in the China-North America air freight index in February, reflecting weak e-commerce demand. As online retailers shift to sea freight consolidation or domestic distribution in the U.S., the impact of U.S. tariffs on B2C shipments has become apparent. Airlines with excessive trans-Pacific capacity are looking for ways to redeploy aircraft, possibly shifting to Southeast Asia or transatlantic routes. Meanwhile, the shift of supply chains to countries such as Vietnam and Indonesia has kept intra-Asia flights active.

Niall van de Wouw, Chief Airfreight Officer at Xeneta, explained: "During the e-commerce boom, a surge in export demand quickly clogged the markets in Hong Kong and South China. In this situation, e-commerce volumes started shifting east to Shanghai, but the additional costs made it less attractive. If a decline in e-commerce volumes means more capacity becomes available in Hong Kong and South China, we expect the Shanghai market to bear the brunt, as seen in February. This situation may be temporary, but uncertainty surrounding the e-commerce market is impacting the air cargo market."

Van de Wouw warns that if the e-commerce market suffers, it could have a profound impact on global air freight prices.

Xeneta's data shows a 5% month-on-month drop in global air freight spot prices. Freightos Air Index data indicates that China-U.S. air freight rates have fallen below $5 per kilogram, down from around $6 per kilogram a year ago, signaling a slowdown in demand. However, this level is still significantly higher compared to long-term averages, suggesting that there hasn’t been a large-scale drop in volumes or a major release of capacity.

Xeneta also cautioned that if e-commerce volumes see a significant decline, its forecast of 4.6% growth in the air freight market by 2025 might be misjudged. This would also have ripple effects in other markets. For example, if I’m now shipping goods from Vietnam to the U.S., I would be concerned about what impact the rates might face if more forwarders and shippers turn to this route to alleviate the tariff impact on direct shipments from China to the U.S.

The Tac Index pointed out that the current air cargo market is "mixed." The fluctuations seen in the market now are driven by deeper structural issues. Delays in the production of a new generation of freighters have slowed fleet expansion, while changing trade policies are forcing airlines and forwarders to reconsider capacity planning.

The air freight industry is in a delicate balance, coping with current overcapacity while preparing for potential shortages. Both airlines and forwarders are well aware that a single tariff policy adjustment could change trade routes overnight.

New U.S. tariffs on goods from Canada and Mexico, along with the planned elimination of the "de minimis" exemption for Chinese e-commerce goods, are causing volatility in traditionally strong trade routes. Although the slowdown in e-commerce demand from China has loosened trans-Pacific capacity, potential countermeasures and further tariff adjustments have made capacity redeployment more cautious.

In its latest air cargo market tracking report, Ti noted that the global air freight industry is facing a complex situation at the start of 2025, with several "significant challenges," such as delayed fleet expansion and airlines prioritizing passenger services, exacerbating capacity constraints. Meanwhile, supply chain disruptions and changing trade policies have created uncertainty in planning. Geopolitical tensions, U.S. tariff adjustments, and the planned cancellation of the "de minimis" exemption are reshaping procurement strategies, prompting retailers to rethink supply chains and nearshoring layouts.

Besides the China-U.S. route, other routes have also seen changes. For example, the Northeast Asia-Europe route saw a 10% year-on-year increase in freight rates, though they fell by 2% month-on-month. Rates from Northeast Asia to the U.S. dropped 17% month-on-month to $3.79 per kilogram. However, transatlantic routes remain strong, with spot rates from Europe to Latin America and North America seeing single-digit month-on-month growth, partly due to reduced bellyhold capacity on passenger planes.

For airlines, performance on return legs remains weak, with rates from North America and Europe to Northeast Asia down 10% year-on-year. However, a glimmer of hope is the U.S. plan to impose additional fees on China-made vessels docking at U.S. ports.

The Tac Index commented: "Container sea freight prices have dropped sharply, and the U.S. Trade Representative’s (USTR) proposed plan to impose over $1 million in fees for each China-made vessel docking at U.S. ports has added to market uncertainty. Some industry insiders believe this could have a positive impact on the air freight market, provided shippers opt to move more goods by air as a result."

Xeneta added that the proposed port docking fees could disrupt sea freight schedules in the short term, pushing up container shipping rates and potentially prompting some cargo to shift from sea to air.

END

Account official:Cross-border ecommerce logistics Baixiaosheng