News #129 - WorldACD Weekly Air Cargo Trends (week 36)

Air cargo exports from India to the USA have plummeted since new tariffs of 50% came into force on 27 August, while volumes from India to Europe have steadily risen, according to the latest weekly figures and analysis from WorldACD Market Data.

India to USA air cargo tonnages have generally been up, year on year (YoY), in recent months, in part due to pressure on US importers to seek alternatives to Chinese suppliers. But India to USA tonnages dipped slightly in the first half of last month after Washington imposed 25% ‘reciprocal’ tariffs on imports from India from 7 August. And after US president Trump in early August announced an increase in those India import tariffs from 25% to 50% from 27 August, to penalize India for buying Russian oil, India-USA air cargo tonnages surged by +28%, week on week (WoW), in week 34 – a year-on-year (YoY) rise of +35% – as shippers tried to rush cargo through ahead of the deadline. Volumes then slumped by -12% in week 35 and by a further -14% in week 36 (1 to 7 September), after the higher tariffs took effect.

In contrast, air cargo volumes from India to Europe have been rising steadily in the last three weeks, taking them +8% higher than in week 36 last year. And volumes from Sri Lanka to the US have also increased significantly since the start of August, standing +13% higher in week 36 than in the equivalent week last year, based on the more than 500,000 weekly transactions covered by WorldACD’s data. Spot rates from India to the USA have also dropped below $4 for the first time in several months, to $3.99 per kilo in week 36, around -22% below their elevated levels this time last year.  

Elsewhere, air cargo markets have remained somewhat volatile and uncertain, affected in week 36 by a number of factors including the Labor Day public holiday in the USA and Canada on 1 September, and by flight cancellations in Hong Kong and other parts of Southeast China due to the latest typhoon, Tapah. Worldwide air cargo tonnages in week 36 were down, WoW, by -3% – around half of which was due to lower volumes from North America origins, mostly attributable to Labor Day.

New patterns emerging

Although comparisons with last year are complicated by the earlier mentioned events in week 36 and continuing volatility, some patterns have been emerging in recent weeks. For example, across the last 10 weeks, overall tonnages from Asia Pacific to the USA are up, YoY, by around +5%, despite lower volumes from CN/HK (down by an average of -5% to -10%, YoY) and from South Korea (consistently down, YoY, by between -20% and -30%). But tonnages from Taiwan, Vietnam and Thailand to the USA have been up, YoY, by around +40%, during this period, on average.

WorldACD last week also reported preliminary full-month figures for August highlighting what appears to be a structural shift from CN/HK to USA markets towards CN/HK to Europe, as the impacts of this year’s new US trade and tariff policies continue to reverberate. CN/HK to USA volumes in August were flat compared with the previous month, but tonnages were down by -5%, YoY. In comparison, CN/HK to Europe tonnages were up, YoY, by +12%.

Those figures back up reports from multiple sources of freighter capacity being shifted from CN/HK-US markets to other markets, and particularly to CN/HK-Europe destinations, in response to the changes in US ‘de minimis’ rules for CN/HK, and higher tariffs.

Since 29 August, the US has suspended duty-free de minimis exemptions for commercial shipments from all countries. Although it’s too early to assess at a statistical level the impact of that change on air cargo flows, within the current fast-changing environment, that’s another factor likely to impact flows in the coming weeks.

Source: WorldACD weekly report.

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