News #124 - Xeneta: Air cargo volumes see a surprise 5% jump in July as shippers circumventing tariffs opted for speed

Global air cargo volumes surged 5% year-on-year in July, defying seasonal trends, as shippers increasingly turned to the speed of air transport to circumvent newly imposed U.S. tariffs, according to the latest market analysis from Xeneta.

While this spike in demand offers short-term relief for carriers, market sentiment remains cautious. Tariff negotiations in Washington are still unresolved, with a new decision deadline set for 7 August, casting continued uncertainty over global trade flows—particularly in the airfreight sector.

Unseasonal Demand Surge Amid Tariff Volatility

Typically a quiet month for airfreight, July instead recorded robust growth, reversing the modest +1% gain in June. Xeneta attributes the increase to tariff-driven frontloading, a modal shift from ocean to air, and heightened geopolitical uncertainty, prompting businesses to accelerate shipments.

Air cargo capacity rose 3% year-on-year in July, but the stronger volume growth pushed the dynamic load factor—Xeneta’s measure of capacity utilization based on both weight and volume—back to 58%, matching levels from a year earlier and recovering the two-percentage-point drop recorded in June.

“As we said earlier in the year, air cargo is piggybacking on the chaos caused by tariffs,” said Niall van de Wouw, Xeneta’s Chief Airfreight Officer. “This is not a sign of increased trade activity, but of the creative ways companies are avoiding the higher costs of tariffs.”

Speed Becomes a Competitive Advantage

Van de Wouw noted that modal shifts are now favoring airfreight.

“If you’re trying to circumvent tariffs, you need speed—and a plane is faster than a ship. For many businesses, having goods sit in a container at sea for 30 days feels like far too long.”

He likened the situation to “a game of cat and mouse” between the U.S. administration and global exporters, with shippers prepared to pay more for air transport today to avoid higher tariff costs tomorrow.

Spot Rates Decline Despite Demand Support

Despite stronger fundamentals, global air cargo spot rates fell for the third consecutive month in July, down 2% year-on-year to USD 2.55 per kg. However, the pace of decline slowed thanks to the demand-supply rebalancing, and a +2% month-on-month uptick offered some relief for carriers.

One notable indicator of market caution: the gap between seasonal rates (valid for over one month) and spot rates (valid for up to one month) widened from USD 0.05 below spot in late May to more than USD 0.20 below by the end of July, signaling subdued mid-term confidence.

De Minimis Exemption Rollback Adds Complexity

The U.S. is preparing to end the de minimis import exemption for all countries by the end of August, a move likely to reshape the small-parcel airfreight market. The exemption was already removed in May for shipments from mainland China and Hong Kong, which together account for roughly two-thirds of all de minimis parcels entering the U.S., according to U.S. Customs and Border Protection.

China Customs data shows this change triggered a 50% drop in China’s low-value and e-commerce exports to the U.S. in June. The broader rollback will particularly affect Canada, the UK, and Mexico, which together make up most of the remaining one-third of affected volume. Potential reciprocal measures by foreign postal authorities could further disrupt flows.

Regional Rate Trends

Transpacific:

• Southeast Asia → North America: Spot rates fell 16% YoY to USD 4.87/kg as capacity constraints eased.
• Northeast Asia → North America: Rates remained stable at USD 4.81/kg, supported by strong demand from Taiwan, where rates jumped 9% YoY to USD 6.85/kg, driven by demand for AI and semiconductor products.
• Mainland China → U.S.: Rates dropped 11% YoY to USD 4.26/kg due to the combined effects of the de minimis ban, higher tariffs, and market uncertainty.

Asia–Europe:

• Northeast Asia → Europe: Rates held at USD 4.16/kg as freighter capacity shifted from Pacific routes to Europe, absorbing a +90% YoY surge in China–Europe e-commerce volumes in June.
• Southeast Asia → Europe: Rates fell sharply 22% YoY to USD 3.02/kg.

Transatlantic:

• Westbound: USD 1.91/kg (+ increase driven by frontloading and reduced bellyhold capacity).
• Eastbound: USD 1.15/kg.

Short-Term Gains, Long-Term Uncertainty

Van de Wouw warned that while the current environment favors air cargo, it is not sustainable in the long term.

“The piggybacking will stop. Economists agree this climate is not good for anyone. Eventually, something has to give, and demand will fall.”

For now, ongoing policy uncertainty remains one of the few factors supporting demand. As he concluded:

“When there is chaos in global trade, it often benefits airfreight—and right now, we’re seeing it on an unprecedented scale.”

Source: https://payloadasia.com/2025/08/xeneta-air-cargo-volumes-surprise-jump-july-shippers-circumventing-tariffs-opted-speed/

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