In recent years, airlines prioritized the soaring demand for e-commerce shipments on trans-Pacific and Asia-Europe routes, often at the expense of traditional general air cargo. However, as U.S. tariffs dampen low-value imports from China, carriers are witnessing a significant decline in both sectors.
E-commerce Growth and Its Impact
The air cargo market achieved record growth in 2024, with global volumes rising by 12%, largely driven by e-commerce. However, the U.S. elimination of duty-free exemptions for low-value shipments under the “de minimis” rule on May 2 has caused a sharp drop in trans-Pacific air cargo demand.
Martin Habisreitinger, COO of Air Freight at Hellmann Worldwide Logistics, highlighted the impact:
“The surge in e-commerce during the pandemic created unprecedented demand on specific routes, especially trans-Pacific and Asia-Europe. Airlines, facing capacity constraints and driven by yield management strategies, naturally prioritized this high-volume, often higher-paying segment.”
This focus on e-commerce also came at the cost of traditional markets. Congestion at ports and disruptions across supply chains further constrained capacity for conventional air cargo shippers.
Traditional Markets Neglected
While carriers focused on e-commerce, traditional air cargo markets suffered due to global economic instability, high inflation, and geopolitical tensions that weakened demand for goods typically transported by air.
Frederic Horst, Managing Director of Trade and Transport Group, commented:
“Airlines pursued the booming cross-border e-commerce market, neglecting the long-term viability of their traditional markets. Now, as the e-commerce boom wanes, they’re scrambling to refocus, but the question remains: is that traffic still there?”
Despite the decline, some sectors of traditional air freight—such as pharmaceuticals and high-value specialized goods—have shown resilience.
The Shift in Market Dynamics
Following U.S.–China trade negotiations in Geneva, the U.S. reduced its duty on Chinese imports from 120% to 54%. However, an additional $100-per-parcel fee, effective May 14, dealt a severe blow to e-commerce companies relying on the de minimis exemption.
Horst believes the reliance on air freight for low-value products was unsustainable, even before these tariff changes:
“Transporting low-value goods by air at $5–$6 per kilogram, plus distribution costs, was a strategy driven purely by market share ambitions. As discretionary spending declines amid inflation, this volume was bound to shrink.”
Freighters Shift to More Lucrative Markets
The revocation of duty-free status for low-value imports has already triggered a reallocation of air cargo capacity. According to data from Rotate, eastbound trans-Pacific freighter capacity fell by 8% year-over-year during May 12–18, while capacity on Asia-Europe lanes rose by 19% over the same period.
Horst noted that freighter operators, including Cargolux, have shifted away from historically underserved markets like Africa-Europe and Latin America-Europe in favor of trans-Pacific and Asia-Europe routes. For instance, Cargolux reduced its African destinations from 35 to just two—Johannesburg and Nairobi.
By April, over 60 freighters were transporting approximately 100,000 tons of e-commerce cargo monthly across the Pacific. However, with the May tariff changes, demand for trans-Pacific shipping has fallen. Rates from Hong Kong to the U.S. spiked by 50% in mid-April to $7.95 per kilogram, before dropping to $4.72 per kilogram by late May, according to the Baltic Air Index.
Looking Ahead
The transition away from e-commerce reliance presents challenges for airlines. Shifting back to traditional air freight markets will require navigating weakened demand, high inflation, and evolving trade policies. Despite the current turbulence, Habisreitinger remains optimistic about certain sectors:
“While the traditional market has declined, it remains integral to air cargo. We’re seeing stabilization and even growth in sectors like pharmaceuticals and high-value goods, which underscore the importance of maintaining a diversified strategy.”
The air cargo industry faces a pivotal moment, balancing the need to adapt to shifting demand while addressing longer-term structural challenges.
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