News #119 - Asia-to-North America Air Cargo Demand Plunges 10.7% After De Minimis Suspension

Air cargo demand on the critical Asia-to-North America trade lane declined sharply by 10.7% year-on-year in May 2025, following the U.S. government's suspension of the de minimis exemption for low-value goods imported from China.

Despite the double-digit drop on this key corridor—representing 24.4% of global cargo-tonne kilometers (CTKs)—global air cargo demand overall grew by 2.2% during the same period, according to data released by the International Air Transport Association (IATA).

Sector Shows Resilience Amid Trade Policy Shifts

Commenting on the results, Willie Walsh, IATA Director General, acknowledged the headwinds:

“A 10.7% drop in traffic on the Asia-to-North America trade lane illustrates the dampening effect of evolving U.S. trade policies. Nevertheless, the global air cargo sector continues to demonstrate resilience—adapting to shifting conditions by rerouting, accelerating, or holding back deliveries as needed.”

Although seasonally adjusted month-on-month demand fell by 1% globally, IATA emphasized that the decline was less severe than many industry analysts had anticipated.

Capacity Trends and Market Adjustments

Available cargo capacity, measured in available cargo tonne-kilometers (ACTK), increased 2.0% year-on-year, with Asia-Pacific carriers expanding capacity by 5.7%. Belly-hold capacity also surged by 5.8% year-over-year and 5.5% month-on-month, representing the strongest growth since 2019.

Despite this capacity expansion, IATA revised its 2025 air cargo forecast downward in early June. The association now projects demand will grow by only 0.7% this year, totaling 275.7 billion CTKs—a significant revision from the 6% growth estimate issued in December 2024. The adjustment reflects both the impacts of the de minimis repeal and additional U.S. tariffs on major trading partners.

E-Commerce and Market Repercussions

A report from Dimerco Express Group, released in late June, revealed persistent weakness in e-commerce airfreight from China to the U.S. and European Union, with “no signs of recovery.” According to the report:

China–U.S. cargo volumes declined by as much as 60%.

E-commerce bookings dropped by approximately 50% in both May and June, following the removal of the de minimis exemption.

Freighter flights on these lanes continued to be routinely canceled.

FedEx corroborated these findings, stating that China-to-U.S. volumes “deteriorated sharply” in early May, contributing to flat international export revenue in its fiscal fourth quarter.

Meanwhile, airfreight rates out of China have continued their downward trajectory. According to a July 24 Freightos update, China–North America rates fell 2% week-on-week, reaching $5.18 per kilogram.

Southeast Asia Emerges as a Bright Spot

In contrast to the weakness observed across Chinese routes, air cargo demand from Southeast Asia—particularly from Thailand and Vietnam—has begun to accelerate, partly in anticipation of the July 9 U.S. tariff deadline.

Dimerco reports that airfreight capacity and pricing from Vietnam remain stable, but expects rate increases in early July.

In Thailand, space is already tight, and freight forwarders are advising shippers to book at least one week in advance.

India’s rates are also expected to rise, as Middle East tensions and disruptions to maritime trade routes put pressure on airfreight options between the Indian subcontinent, the EU, and the U.S.

Global Rate Environment

While Southeast Asia sees growing demand, global airfreight rates are undergoing a general cooling period:

IATA reports that global freight rates in May fell 2.9% YoY and 3.7% MoM, marking the first global rate decline in 2025.

WorldACD, which tracks over 500,000 transactions weekly, noted that for the week of June 16–22, average rates stood at $2.43 per kg, down 1.2% from 2024, though up 1.7% from the week prior.

Outlook

As global trade adapts to shifting U.S. policy and regional disruptions, the air cargo market is in a state of recalibration. While challenges persist—particularly for China-U.S. volumes—emerging opportunities in Southeast Asia and South Asia may offer short-term relief and long-term strategic pivots for carriers and freight forwarders alike.

The coming months will be critical in determining how quickly the market can rebalance, particularly as geopolitical risks, regulatory shifts, and inflationary pressures continue to shape the airfreight landscape.

Source: https://finance.yahoo.com/news/asia-north-america-air-cargo-173424088.html

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