News #127 - Tariffs throw US airfreight into turbulence

The global air cargo sector is entering a period of sharp disruption and uncertainty in 2025, fueled largely by shifting U.S.–China tariffs. These new trade barriers are destabilizing supply chains, raising costs, and compelling stakeholders across the airfreight ecosystem to rethink fleet deployment, network strategies, and long-term operations.

“Everything is in flux—the tariff rates, their potential duration, and the uncertainty of whether they will remain in place at all,” explains Joey Smith, Director at Cassel Salpeter. “Potential loopholes and exemptions further complicate planning, particularly for manufacturers, distributors, and wholesalers.”

Smith notes that companies dependent on transatlantic and intercontinental supply chains are reassessing everything from inventory management to supplier diversification. Even last-mile delivery networks have come under pressure, he adds.

Recent air cargo data has also become distorted by “significant front-loading by Chinese manufacturers rushing shipments into the U.S. before the tariff pause potentially expires,” Smith says. This makes recent volume and pricing figures unreliable as indicators of long-term trends. Compounding the situation are macroeconomic headwinds such as rising inflation risks, weaker consumer sentiment, and slowing demand.

Cost Volatility and Shifting Supply Chains

The tariff impact is most pronounced in the e-commerce sector, where demand patterns and cost structures have changed significantly.

“The elimination of the $800 de minimis threshold for Chinese goods, combined with higher tariffs, is expected to reduce air cargo volumes—particularly low-value e-commerce shipments, which were previously a cornerstone of U.S.–China traffic,” Smith explains.

This policy shift is already pushing e-commerce platforms to diversify supply chains. Some are relocating production and distribution hubs to other Asian markets less affected by tariffs. Airlines, in turn, are reallocating aircraft capacity, with services pulled from the China–U.S. corridor and redirected to Europe, Mexico, and Latin America.

Smith calls the tariff surge a “black swan event” that underscores the unpredictability of protectionist policies. “The greatest damage is uncertainty. There appears to be no coherent long-term policy or clear objectives. The result is a major setback for free trade and global integration, which historically underpinned U.S. economic leadership despite persistent trade deficits.”

The long-term consequences could also reshape fleet strategy. A reduction in e-commerce demand may limit the expansion of dedicated freighter fleets, while rising aircraft part costs and delays exacerbate operational challenges. With freighter aircraft now playing a larger role compared to bellyhold capacity, volatility in this segment has an outsized impact.

Airlines Recalibrate Fleets and Networks

The tariffs have disrupted one of the world’s largest trade corridors—the China–U.S. lane—forcing airlines to rethink fleet deployment.

“The suspension of the de minimis exemption is significant, representing an estimated 1.2 million tons of air cargo annually, or more than 50% of goods flown from China to the U.S.,” Smith explains. By comparison, these shipments represented just 5% in 2018.

With de minimis unlikely to return, major e-commerce platforms such as Alibaba, Shein, and Temu are increasingly moving goods in bulk via sea freight to U.S. distribution hubs rather than shipping individual parcels directly by air.

Several Asia-Pacific airlines have already announced plans to reallocate freighter capacity to other routes. Freight forwarder Dimerco, for instance, recently reported cancellations on scheduled China–U.S. services, with some aircraft redeployed to Mexico and Latin America. Approximately 70 freighters have temporarily suspended transpacific flights.

Smith sees potential opportunity amid the disruption: “New markets may open, higher yields may be achieved, and carriers may form partnerships in countries unaffected by tariffs. Businesses could also be more willing to pay a premium for reliable, faster airfreight solutions, though costs will cascade through the supply chain and, in some cases, to consumers.”

Ripple Effects on Maintenance and Compliance

Tariff volatility is also reshaping the Maintenance, Repair, and Overhaul (MRO) segment, where shifting customs interpretations create operational friction.

“U.S. MRO providers and aftermarket parts distributors could benefit from reshoring effects,” Smith says. “But inconsistent enforcement of customs rules, particularly on whether imported parts must be airworthy to qualify for duty-free treatment, creates confusion and inflationary risk.”

Another major consequence is the erosion of the 1980 Agreement on Trade in Civil Aircraft, which eliminated tariffs on aerospace products among major nations. The removal of these exemptions raises production costs for aircraft manufacturers and increases procurement expenses for airlines, potentially driving up the price of new aircraft and spare parts.

Smith is skeptical that tariffs will revive U.S. aircraft manufacturing: “It’s very unlikely. Instead, the sector is lobbying for exemptions to preserve decades of tariff-free trade, which has supported a $75 billion annual trade surplus. Boeing, heavily dependent on exports, and Airbus, with significant U.S. operations, are both exposed to higher component costs.”

Balancing Costs and Competitiveness

U.S.-based cargo airlines now face the challenge of absorbing higher import costs while staying competitive globally.

“Lower fuel prices could provide relief, but only if demand remains stable,” Smith says. One cost-cutting measure could involve consolidating air and ocean shipments under single customs entries, reducing brokerage and processing fees that are expected to rise sharply with the removal of de minimis thresholds.

Market consolidation is another defining trend. The top 10 cargo carriers operate more than 2,300 freighters, with FedEx leading at 700 aircraft, followed by UPS, Qatar Airways, Emirates SkyCargo, DHL, and Korean Air Cargo.

Navigating this landscape requires balancing tariff shocks, cost inflation, and shifting trade flows while meeting the evolving expectations of global supply chains.

Outlook: Adaptation as the Only Path Forward

As tariff-driven disruption reshapes the airfreight sector, businesses, airlines, and logistics providers face an environment of unprecedented uncertainty.

“The absence of clear policy direction and the unpredictable duration of tariffs have created instability across the industry,” Smith warns. “Only through diversification, adaptation, and innovation can the air cargo ecosystem weather this storm.”

Source: https://aircargoweek.com/tariffs-throw-us-airfreight-into-turbulence/

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