News #134 - Trade war only accelerated Southeast Asia air cargo growth

Industry executives conclude that Southeast Asia's air cargo boom reflects fundamental economic drivers rather than temporary trade war effects

Air cargo growth in Southeast Asia would still have taken place regardless of the supply chain changes seen with the latest US-China trade war.

This was the conclusion of panellists at a ‘Sustainable growth of air cargo in Southeast Asia’ session on day one of the 2025 air cargo Southeast Asia conference.

The most recent US-China trade war began in the first quarter of this year and has seen airlines move capacity away from China to Southeast Asia and also away from the transpacific trade lane to Asia-Europe.

But the geopolitically driven trade unrest has only served to accelerate a trend already in motion, pointed out Mark Drusch, chief officer cargo, Qatar Airways Cargo.

Drusch said: “We shouldn’t be surprised because these are economies that are growing very quickly, a relatively speaking young population phase, growth in the middle class or moving up to the middle class. And while China has been growing (trade and capacity has been curtailed).”

“So it’s not surprising to me that we are seeing this growth and I think it has been accelerated because of the trade war, but we still would have seen this growth; it just happened sooner because of the trade war."

The participants of the panel agreed that regional growth is likely to continue in the next few years rather than being a temporary trend.

Southeast Asia has been rising in importance as a trade hub for over a decade now.

As well as the change in routes for e-commerce as a result of the the end of the de minimis exemption, first in China and now the rest of the world, and with changes to general and specialist cargo shipments seen with evolving tariffs, there has been a longer term continued shift of production away from China to Southeast Asia with the China+1 strategy utilised by shippers to reduce reliance on the country and reduce costs.

Mark Jason Thomas, chief executive officer of MAB Cargo, the cargo business of Malaysia Airlines, said that e-commerce and the China+1 strategy that has seen growth in countries such as Malaysia, Vietnam and Thailand has kept growth “steady” and the region is “well positioned” for further growth.

Additionally, Stanislas Brun, chief cargo officer at Etihad Cargo, remarked that there had been a notable shift in production with new air cargo markets and routes. He said initially production was focused on “in China and India” and now it is focused on countries including “Vietnam, Bangladesh and Cambodia”.

Or Zak, chief commercial officer, Challenge Group, agreed that the manufacturing move to Southeast Asia will likely continue: “The main focus for e-commerce companies was the US and I think there was a conscious decision made, even before Covid, that there needs to be a shift to start diversifying business because there’s more and more e-commerce in the Asia Pacific region

The move of production and therefore cargo to Southeast Asia has “definitely been intensified by geopolitical forces”, which, along with “China+1”, points to activity in the region intensifying more than slowing down.

Crucial capacity management

Managing capacity in a high-demand region, especially during peak demand, is a key consideration, but this is a managed risk, according to the conference panellists.

Speaking about Qatar Cargo's capacity strategy, Drusch said: “We manage in three different ways. First of all, during the summer season, we put more aeroplanes in the hangar. This means that when September starts, maintenance is complete and the freighters are in good shape for operations.

He pointed out that summer is also when passenger planes are in most use, so service demand for these passenger planes is typically highest during winter.

Secondly, Drusch said that “because we have such a vast global network…we’re very aggressive at moving around during those individual peaks through the holidays”.

He added: "We look very carefully at where the peaks and demand are, where we should put the extra capacity and if we take some out, where should it be from.”

Zak pointed out that getting capacity management right is crucial for Challenge as a pure freighter operator, and because it is no longer easy to predict demand cycles.

“We need to be agile as we are 100% dependent on cargo. One thing that we’ve seen over the last two years is that seasonality doesn’t exist anymore. We are now just at the supposed prime of the peak season. We don’t really see it as much as we would like, maybe in terms of an increase in the yields.

“So you need to be able to identify where the opportunity is, to listen to your customers, understand what their requirements are, where they see the opportunity, and to be able to move the aircraft to start and operate new destinations based on their requirements.

“We really need to understand where they see the growth, where they see the shift in terms of production and where they think they want capacity.”

Additionally, Brun stressed that partnerships can create value and help strengthen network and frequencies on certain routes to help manage demand.

Source: Air Cargo News

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