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4 July 2025           No. 32

Geneva – The International Air Transport Association (IATA) expressed its deep disappointment at the recommendation of the Global Solidarity Levies Task Force (GSLTF) to target air transportation in its aim to “improve domestic revenue mobilization of developing countries and support international solidarity (in particular with regards to climate change mitigation and adaptation, pandemics and other development challenges).”

An initial assessment of the GSLTF’s proposals reveals severe deficiencies, including that:

• A Competitive Airline Industry Does Not Generate Excessive Profits: The GSLTF announcement, while lacking any meaningful detail, quotes a CE Delft estimation that a premium flyer levy could generate EUR 78 billion (over USD 90 billion) per year. That is approximately three times the airline industry’s global estimated profit of USD 32.4 billion in 2024. Airlines’ structurally thin net profit margin (estimated at an average of 3.4% industrywide for 2024 and approximately half the global average for all industries) must also be considered in any policy deliberation.
• The Airline Industry Has a Multi-Trillion Dollar Commitment to Sustainability: Airlines have committed to achieving net zero carbon emissions by 2050—an effort that is expected to cost USD 4.7 trillion over the period 2024-2050. This will ensure that aviation can deliver its direct contribution of 3.9% of global GDP and 86.5 million jobs globally while addressing its estimated 2.5% share of global carbon emissions. Increasing aviation taxes on airlines as proposed will limit the industry’s ability to invest in solutions that deliver long-term emissions reductions.
• A Specialized Climate Financing Mechanism for Aviation Already Exists: The GSLTF’s proposal disregards the role of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), which was agreed through the International Civil Aviation Organization and is the world’s first globally agreed mechanism to manage carbon emissions from an industrial sector—in this case international aviation. The GSLTF states were among those that created CORSIA under the principle that it would be the single harmonized market-based measure to manage international aviation’s carbon emissions. Overlapping measures, such as the Solidary Levy, would undermine CORSIA and lead towards a fragmented, inefficient and inconsistent global policy framework. It is essential that all states (those in the GSLTF included) focus on making CORSIA successful rather than advancing overlapping measures. Topping the agenda of critical support needed for CORSIA is states making available the carbon credits so that airlines can fulfil their CORSIA obligations and states can realize their climate financing value.

 

• Failure to Assess Rising Costs is an Inescapable Consequence of the Proposed Levy: In addition, the GSLTF has not released any assessment of the impact that such a levy would have on the economies of the very states to which it aims to funnel the funds, or the broader impact it will have on all travelers. It has also not detailed how such funds would be used. Although the GSLTF is positioning its proposal as targeting premium travel, it fails to recognize the critical importance of this segment to making route networks viable. Punishing premium travelers or burdening the sector with excessive taxes would upend route dynamics which enable the connectivity that nearly five billion travelers will rely upon this year. The impact of the GSLTF’s proposal would make airlines less efficient and more financially strained. This would mean higher costs for all travelers and for items shipped by air. Such reduced affordability for a sector that is an indispensable economic catalyst ultimately brings the unintended consequence of weaker economic growth.

“The airline industry is an economic catalyst, not a cash cow. Yet governments casually suggest a tax on flyers that is three times the airline industry’s annual profit without considering the real-world side effects for an industry that is a lifeline for remote communities, invigorates tourism markets and links local products to global markets. Moreover, while the modalities for the GSLTF proposal are not specified, history shows us that these taxes simply go to the general exchequer, with little, if any, of the revenues generated going to climate change adaptation,” said Willie Walsh, IATA’s Director General.

“The GSLTF says that their solidarity levies won’t increase the cost of living for ordinary citizens or impact things like household bills. This is untrue. The bottom line is that, if followed, the GSLTF’s recommendations will increase the cost of air travel for all travelers and do more harm than good. Extracting tens of billions from aviation will cripple its ability to invest in achieving net zero by 2050, change route dynamics to the extent that connectivity will suffer, and short-change countries on the critical economic support that air transportation provides,” said Walsh.

“To be clear, airlines are not evading doing their part to mitigate the impacts of climate change. The industry is doing everything possible to achieve net zero carbon emissions with Sustainable Aviation Fuels (SAF), more efficient operations, and better technology. The last thing these efforts need is a USD90 billion gut punch of a tax. With respect to air transportation, the aims of the GSLTF could best be realized by supporting investments in SAF production so airlines can deliver prosperity by connecting people and businesses to global opportunities,” said Walsh.

Independent global research carried out by Savanta in 15 countries for IATA reveals deep public skepticism over air travel taxation:

• 73% said that green taxes are government greenwashing
• 79% said there are too many taxes on flying
• 78% said that taxation is not the way to make aviation sustainable
• 74% don’t trust governments to spend tax money wisely

 

• 88% believe that taxes collected from air travel should be invested to improve travel for passengers
• Taxation was the least popular modality to compensate for carbon emissions associated with flying with only 9% support. More popular preferences are SAF purchases (25%), carbon emissions reducing technology investments (23%), emissions reduction research (18%) and offsetting (13%).

 

 

 

 

 

 

 

 

By Damian BrettDamian Brett30 June 2025

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Pallet being loaded

Air cargo demand continued to grow in May despite the US implementation of steep tariffs and the ending of the de minimis exemption for shipments from China.

The latest monthly statistics from IATA show that air cargo demand increased by 2.2% year on year in May, while capacity was up 2% and the load factor increased by 0.1 percentage points to 44.5%.

Growth has slowed compared with the year so far, as the growth rate for the first five months stands at 3.2% year on year.

While overall volumes were up, IATA said that demand on the trade lane from Asia to North America had declined by 10.7%.

However, this was more than made up for by other trades, such as Asia-Europe, which was up by 13.4%, there was a 10.8% improvement on Middle East-Asia services, the within-Asia trade improved by 9.1% and North America-Europe grew by 8.2%.

IATA said the “significant decrease” in the Asia-North America trade lane was expected as the effect of front-loading faded and changes to the de-minimis exemption on small package shipments were enforced.

“As cargo flows reorganised, several route areas responded with surprising growth,” the airline association explained.

IATA director general Willie Walsh said: “Air cargo demand globally grew 2.2% in May. That is encouraging news, as a 10.7% drop in traffic on the Asia to North America trade lane illustrated the dampening effect of shifting US trade policies.

“Even as these policies evolve, already we can see the air cargo sector’s well-tested resilience helping shippers to accommodate supply chain needs to flexibly hold back, re-route or accelerate deliveries.”

During the month, US tariffs on Chinese products reached as high as 145%, although the two countries later reached an agreement that saw the tariffs reduced to 30% for a 90-day period.

There were reports of a surge in shipments to the US once the tariff reduction was announced, as companies looked to take advantage of the lower rate and others were catching up.

 

Meanwhile, the removal of the de minimis exemption means packages from China transported by a commercial airline will need to pay a 30% tariff rate, or, when using postal networks, they will be subject to a rate of 54% or a flat fee of $100.

Figures from consultant Aevean show that much of the US e-commerce demand from China switched to other lanes.

Looking at trade indicators, IATA pointed out that global manufacturing contracted in May, with the Purchasing Managers Index falling to 49.1, below the 50 mark that signals growth

New export orders also remained in negative territory at 48, reflecting pressure from recent US trade policy changes, IATA said.

In terms of regional performance, Asia Pacific airlines registered 8.3% year-on-year demand growth for air cargo in May, the strongest growth of all regions, and capacity increased by 5.7%.

North American carriers noted a -5.8% year-on-year decrease in growth for air cargo in May, the slowest growth of all regions, while capacity decreased by -3.2% year-on-year.

European carriers saw 1.6% year-on-year demand growth for May and capacity increased 1.5%.

Middle Eastern carriers reported a 3.6% increase in demand for the month, while capacity was up 4.2%.

Latin American carriers registered a 3.1% year-on-year increase in May and capacity increased 3.5%.

Finally, African airlines saw a 2.1% decrease and capacity increased by 2.7%.

By Damian BrettDamian Brett18 June 2025

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Atlas Air Worldwide is expecting a shortage of widebody freighter capacity for the next ten years and beyond.

Speaking to Air Cargo News at the recent Air Cargo Europe event, chief executive Michael Steen explained that widebody freighter capacity additions would struggle to keep pace with demand growth, given the need to retire older aircraft and the lack of new aircraft able to enter the market.

Steen explained that there are currently around 630 widebody freighters in operation, but around 100 of those are older than 30 years and are therefore heading towards the typical retirement age.

“What is important to also remember is that the older the aircraft gets, the lower the utilisation is going to be because you need to maintain them more frequently,” Steen explained.

“So, the global freighter fleet is now ageing and we are seeing a situation here that we haven’t seen before, where aircraft are retiring faster than they are being replenished.”

Steen said that widebody freighter capacity is only expected to grow at 1% per year as production of the Boeing 777 freighter is due to end in 2027 and deliveries of the next generation of widebody freighters – the Boeing 777-8F and the Airbus A350F – are not due to start until 2028 and the second half of 2027 respectively, assuming there are no further delays to the production timeline.

“This means you have at least one calendar year with zero new freighters,” said Steen.

Meanwhile, he pointed out that none of the three 777 conversion programmes have yet received certification from aviation authorities, and much of the feedstock is tied up in passenger operations as production of next-generation passenger jets continues to be delayed.

According to IATA, the global backlog for new aircraft orders has reached a record 17,000 aircraft.

On the demand side of the equation, cargo volumes are expected to grow at around 3.5%-5.5% per year in the long term.

“When you look at all this and put it together, we are going to be capacity-constrained well towards the 2040s, and there is structurally no way around it from a capacity perspective,” said Steen.

“When you look at all this and put it together, we are going to be capacity-constrained well towards the 2040s, and there is structurally no way around it from a capacity perspective,” said Steen.

“The only thing that could derail this is a complete collapse of the global economy.”

 

On the topic of future widebody freighter capacity, Steen was circumspect regarding Atlas’ future plans.

The company is the world’s largest widebody freighter operator, with 15% of the global widebody fleet, when MD-11Fs aren’t included, but it has yet to confirm its plans for the next generation of freighters.

Atlas’ Michael Steen appointed to IATA’s board of governors

“We added eight widebody aircraft last year, we added two more 777 freighters this year, so the fleet is continuing to grow, and we will continue to capitalise on what is available in the marketplace over the next few years,” said Steen.

“But we are reviewing our long-term fleet strategy, and we will make a decision, likely this year, in terms of what we are going to do going forward.”

He pointed out that its fleet of widebody freighters was relatively young, which gives the company some flexibility.

On the current market conditions, Steen said Atlas takes a long-term view and considers the market holistically.

Atlas has capitalised on growing e-commerce demand with direct agreements with several of the e-commerce platforms.

However, this sector faces increased scrutiny, not only with duties now being applied in the US and other regulators looking to take similar steps, but also because shipments to the US now need to pass through the customs process, which increases both complexity and lead times.

Steen says there was a big demand dip when “liberation day” happened, with industry-wide volumes on the transpacific dropping by as much as 40%.

“But globally, airfreight continued to grow and demand continued to grow. The e-commerce players in China opened up new markets and re-routed their controlled capacity,” said Steen.

“We re-routed those aircraft to operate into Mexico and various locations in South America and Europe where these e-commerce platforms continue to expand.”

As a result, Steen said the impact of US tariffs and the removal of de minimis for China and Hong Kong had been “relatively muted”, although he added that the company did feel some of the impact.

Steen explained that Atlas is able to flex its assets and has a global reach, with more than 300 destinations in more than 80 countries, meaning it can more easily switch capacity to match demand.

He pointed out that combination carriers need to operate through hub and spoke systems, belly capacity is tied into passenger networks and integrators also need to operate through hubs.

“Our model is completely flexible because we literally just move the aircraft. We have outsourced all the handling, we have outsourced all the maintenance, so we don’t have that fixed infrastructure that holds you back.”

Also, much of Atlas’ business is on a long-term basis, which has also protected the company. Meanwhile, it also has a range of customer types.

“If you look at our business, we are highly diversified across the entire supply chain,” said Steen.

“We serve several airlines with ACMI capacity, we have dedicated agreements with several of the freight forwarders, we have dedicated agreements with the ocean shipping companies, we operate for all the express carriers, and we lease aircraft directly to manufacturers and e-commerce platforms as well.”

By Damian BrettDamian Brett14 June 2025

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Generic-ULDs-credit-shutterstock_1312150418

Air cargo volumes between China and the US began to ease back in the first full week of June after surging from mid-May.

Figures from data provider WorldACD show that in the week ending 8 June (week 23), flown chargeable weight from China and Hong Kong to the US fell 10% compared with a week earlier and is around 19% down year on year.

Spot rates on the trade, which had also surged as May progressed, were also down in week 23. WorldACD figures show that spot prices dropped 5% compared with a week earlier and are down 17% compared with last year.

WorldACD said demand from China and Hong Kong had been given a boost in May thanks to the pause of the tarrif war between China and the US.

This now appears to have eased off.

“This significant decrease in both tonnages and rates ex-CN/HK to the US followed a short recovery during the previous three weeks after the most-recent set of US import tariffs on CN/HK-made goods was paused.

“With that pause in tariffs remaining in place for now, this latest slump in the CN/HK to US market in week 23 suggests that last month’s rebound was a temporary rather than structural recovery, linked to delayed volumes ‘catching up’ following the suspension of the punishingly high tariffs that had been imposed in April.”

WorldACD added that the decline in trade between the US and China was also a “significant factor” in the worldwide decline of tonnages by 3% week on week during week 23.

The data provider added that various holidays also played a role in the decline. Global volumes are down 2% year on year.

Volumes from China to Europe were also down, declining 5% week on week, although there was a 2% increase from Hong Kong.

 

“That contributed to a 4% week-on-week decrease in tonnages from Asia Pacific origins as a whole, although there was also a 6% week-on-week fall ex-Southeast Asia, largely driven by Eid Al-Adha holidays (5-8 June), especially from countries such as Malaysia (-14%) and Indonesia (-10%),” WorldACD said.

“Volumes ex-South Korea were also lower (-6%) due to the country’s Memorial Day on 6 June.”

While spot rates from China fell in week 23, overall full-market average spot and contract rates “were relatively stable in week 23” and increase d by 1% to $2.44 per kg.

Negotiable air cargo document draft convention set to be finalised

By Damian BrettDamian Brett9 June 2025

Preparation,Before,Flight.,Loading,Of,Cargo,Container,Against,Airplane.

The United Nations Commission on International Trade Law (UNCITRAL) is expected to soon finalise the draft convention on negotiable air cargo documents to allow the transfer of ownership of goods while in transit.

The draft document is expected to be finalised at the 58th UNCITRAL session to be held in Vienna between 7 July to 23 July.

At a recent event to raise awareness of negotiable documents, a call for action was launched to invite all governments interested in global trade to participate in the finalisation of the draft UN convention on negotiable cargo documents.

The draft convention establishes negotiable cargo documents as a title representing goods in transit across all modes of transport, which could be used to enhance flexibility in trade, bridge the trade finance gap and support the digital transformation of global trade.

Once finalised, the draft convention will be submitted to the United Nations General Assembly for adoption in late 2025.

Unlike ocean bills of lading, transport documents issued by rail, road and air carriers, which are often known as consignment notes or air waybills in the case of air cargo, are not used as documents of title and cannot be transferred to another party during transport.

The negotiable cargo document under development at UNCITRAL is intended to serve as a document of title to fill this gap in multimodal and unimodal transportation, not involving a maritime leg.

Being able to switch to alternative modes of transportation in case of disruption of shipping routes without diminishing the value of collateral in the context of trade finance or losing the ability to sell goods in transit is another reason for shippers to use negotiable cargo documents.

Under the proposals, the negotiable cargo documents will exist in a digital form, known as negotiable electronic cargo records.

The draft instrument will provide a legal framework for the issuance and use of a single electronic record that could cover door-to-door transportation, thereby simplifying the documentation process and increasing efficiency in operations.

 

1 June 2025         No. 22

New Delhi – The International Air Transport Association (IATA) reported that $1.3 billion in airline funds are blocked from repatriation by governments as of end April 2025. This is a significant amount, although it is an improvement of 25% compared with the $1.7 billion reported for October 2024.

IATA urged governments to remove all barriers preventing airlines from the timely repatriation of their revenues from ticket sales and other activities in accordance with international agreements and treaty obligations.

“Ensuring the timely repatriation of revenues is vital for airlines to cover dollar-denominated expenses and maintain their operations. Delays and denials violate bilateral agreements and increase exchange rate risks. Reliable access to revenues is critical for any business—particularly airlines which operate on very thin margins. Economies and jobs rely on international connectivity. Governments must realize that it is a challenge for airlines to maintain connectivity when revenue repatriation is denied or delayed,” said Willie Walsh, IATA’s Director General.

10 countries are responsible for 80% of blocked funds

10 countries account for 80% of the total blocked funds, amounting to $1.03 billion.

Country                Amount USD Million

Mozambique     205

XAF Zone*          191

Algeria  178

Lebanon              142

Bangladesh         92

Angola  84

Pakistan               83

Eritrea   76

Zimbabwe           68

Ethiopia                44

*XAF Zone (Cameroon, Central African Republic, Chad, Congo, Equatorial Guinea, and Gabon)

Country Highlights

Pakistan and Bangladesh, previously in the top five blocked funds countries, have made notable progress in clearing their backlog to $83 million and $92 million, respectively (from $311 million and $196 million in October 2024, respectively).

Mozambique has climbed up to the top of blocked funds countries, withholding $205 million from airlines, compared with $127 million in October 2024. The Africa and Middle East (AME) region accounts for 85% of total blocked funds, at $1.1 billion as of end April 2025.

The most significant improvement was noted in Bolivia, fully clearing its backlog that stood at $42 million at end October 2024.

 

 

By Rebecca JeffreyRebecca Jeffrey29 May 2025

IATA: Air cargo volumes predicted to rise 5.8% in 2025

Seasonal demand, front loading of shipments to avoid tariffs and lower fuel prices helped air cargo demand rise again in April, but airlines need to remain ready for trade changes, IATA has warned.

The trade association said that total demand, measured in cargo tonne km (CTK), rose by 5.8% year on year. Month-on-month, demand also rose by 2.3%. Demand rose 4.4% year on year in March due to front loading of cargo.

“Fashion and consumer goods are typically shipped between April and June, ahead of the summer retail cycle, supporting these numbers. Moreover, front-loading aimed at avoiding the upcoming US tariff change on 2 May, 2025, regarding lifting of the de minimis allowance, contributed as well,” said IATA in its Air Cargo Market Analysis for April.

Capacity, measured in available cargo tonne km (ACTK), increased by 6.3%.

The cargo load factor (CLF)—measured as CTK divided by ACTK—stood at 43.9%, a 0.2 percentage point decline compared to April 2024.

“This slight decrease indicates that capacity growth outpaced demand, aligning with broader market trends in air freight utilisation,” said IATA.

Speaking about the industry’s performance in April, IATA director general Willie Walsh, said: “Air cargo demand grew strongly in April, with volumes up 5.8% year-on-year, building on March’s solid performance.

“Seasonal demand for fashion and consumer goods — front-loading ahead of US tariff changes — and lower jet fuel prices have combined to boost air cargo. With available capacity at record levels and yields improving, the outlook for air cargo is encouraging.

“While April brought good news, stresses in world trade are no secret. Shifts in trade policy, particularly in the US, are already reshaping demand and export dynamics. Airlines will need to remain flexible as the situation develops over the coming months.”

Alongside current trade tensions, IATA said air cargo growth outpaced global goods trade, which increased by 6.5% over the previous month.

The global manufacturing PMI rose to 50.5 in April, signalling expansion for the fourth consecutive month. However, the PMI for new export orders fell 2.8 points to 47.2, remaining below the 50 threshold for growth.

Additionally, jet fuel prices dropped 21.2% year on year and 4.1% month on month, the third consecutive monthly decrease.

Regionally, Asia Pacific and Latin American carriers led year-on-year demand growth in April, but Middle Eastern carriers trailed behind.

Latin American carriers saw a 10.1% increase in cargo traffic, while Asia Pacific airlines saw a 10% increase.

African airlines saw a 4.7% rise and North American carriers saw 4.2% growth. Meanwhile, European carriers experienced growth of 2.9% and Middle Eastern carriers saw 2.3%.

In terms of trade lane growth, all international routes experienced growth in April, except for Middle East-Europe, Africa-Asia, and intra-European, noted IATA.

By Rebecca JeffreyRebecca Jeffrey21 May 2025

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Cathay Cargo has reported reduced air cargo demand from Hong Kong and the Chinese Mainland in May following tariff and de minimis changes, but said volumes from other parts of its network are helping to fill the gap.

Writing in the company’s monthly performance wrap-up for April, chief customer and commercial officer Lavinia Lau gave an early preview into its performance for this month: “Turning to May, we have seen steady replacement cargo from other parts of our network, including Southeast Asia, during the first half of the month amidst reduced demand from Hong Kong and the Chinese Mainland.

“We will continue to closely monitor the ongoing developments in the second half.”

WorldACD data shows airfreight volumes from China and Hong Kong to the US have declined since the end of the de minimis exemption covering Chinese e-commerce packages in early May.

The US and China have since paused their trade war for 90 days, reducing tariffs from 145% to 30%.

Non-postal e-commerce packages from China are subject to the 30% tariff rate while packages being transported through postal networks face a 54% (or a $100 flat fee) rate.

Lau added that “the latest announcements regarding the tariffs between China and the US provide some reassurance to the market in the near term” and said the airline would adjust freigher capacity if necessary.

While it’s not yet clear what impact trade disruption will have on Cathay Cargo’s airfreight volumes this month, in April, Cathay achieved a 13.6% year-on-year increase in air cargo volumes.

Demand for specialist solutions offered by the business continued to grow, said Lau.

Available Freight Tonne Kilometres (AFTKs) increased by 8.9% while load factor decreased by 1.1 percentage points year on year.

In the first four months of 2025, the total tonnage increased by 12.4% compared with the same period for 2024.

Lau said: “Tonnage in April was 10.4% lower than in March, primarily due to the traditional first quarter-end peak in March and the various holiday periods in April. However, our specialist solutions maintained their growth momentum and we saw increased demand for our Cathay Priority solution on the Asia Pacific-United States trade lane ahead of the implementation of trade tariffs.

 

“Demand for our Cathay Expert solution continued to grow, supported by robust exports of semiconductor machinery from North Asia as well as ad hoc demand out of Europe to Hong Kong.”

Cathay’s year-on-year increase in air cargo volumes for April is well ahead of the 4% growth in global volumes for the month that Xeneta previously reported.

In addition to tariff and de minimis challenges, the Association of Asia Pacific Airlines (AAPA) recently called for governments to tackle supply chain disruption that is delaying deliveries of new aircraft, constraining capacity and threatening Asia Pacific trade growth.

 

 

By Damian BrettDamian Brett19 May 2025

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Air cargo demand between China and the US fell in the first full week of the end of the de minimis exemption covering Chinese e-commerce packages.

Data released by WorldACD for the week ending 11 May (week 19), shows that airfreight volumes from China and Hong Kong to the US declined by 10% compared with week 18, which had already suffered a 14% decline on a week earlier.

“Year-on-year volumes from China and Hong Kong to North America were down 27% in week 19, a fourth week of double-digit percentage decline,” the data provider said.

Week 19 was the first full week since the US ended the de minimis loophole for China that had allowed e-commerce packages to enter the country duty-free and with minimal customs scrutiny.

The exemption was removed on 2 May, meaning it also had a partial impact on week 18 performance, on top of the Labour Day holidays in China.

The US and China have since put their trade war on ice for 90 days, reducing tariffs from 145% to 30%, but non-postal e-commerce packages from China still face the 30% tariff rate as well as customs scrutiny and postal network packages face a 54% (or a $100 flat fee) rate.

This pause may help cargo volumes recover, the data provider said.

 

“The coming weeks will likely produce another twist in the plot after the unexpectedly swift pause in the China-US trade war, leading to expectations of front-loading that could stretch reduced container shipping capacity,” WorldACD said.

“Above all, the 90-day suspension of elevated tariffs has also reduced the duty on China-origin parcels to the US, which could trigger a resumption of the use of airfreight for this business.

“It should be noted, though, that parcels shipped outside postal networks have to undergo customs clearance, adding cost and transit time, which will affect the appeal of using airfreight to ship direct from China to the US.”

WorldACD, week 19 2025

WorldACD, week 19 2025

Source: WorldACD

Looking at demand levels on a global basis, airfreight volumes in chargeable weight terms declined by 1% week on week in week 19, “marking a string of contractions since the first week of April that was only interrupted by stable volumes in week 17”.

On a year-on-year basis, volumes were actually up by 2% compared with a year ago in week 19.

 

 

By Damian BrettDamian Brett2 May 2025

The US de minimis exemption for packages from China and Hong Kong ends today, with air cargo waiting to see how much of an impact it will have on the market.

The end of the exemption means that from 2 May, packages from China and Hong Kong worth less than $800 will no longer be able to enter the US duty-free and with minimal customs scrutiny.

They will now have to pay a 120% tariff rate or a flat fee of $100, due to rise to $200 at the start of June.

Last year, as many as 4m packages a day were entering the US under the de minimis exemption, up from 2.8m per day in 2023.

Online retailers such as Shein and Temu have been exploiting the loophole to sell goods cheaply to US consumers.

According to data firm Xeneta, approximately 50% of air cargo shipments on the China–US route is e-commerce, accounting for around 6% of global volumes.

“A sharp drop in demand is likely to challenge carriers’ capacity planning, with early signs already pointing to freighter flight cancellations and potential redeployments to other trade lanes,” it said.

“This is a double-edged sword. A decrease in demand on one of the key airfreight lanes between Asia Pacific and North America will have a big impact, but so too will the redeployment of capacity on a global level,” said Xeneta head of airfreight Niall van de Wouw.

“This may be a year when we grow weary of seeing the word ‘unprecedented’ in market performance statements. The macroeconomic picture will depend on how long the uncertainty lasts and what will be at the end of it, but the outlook currently looks quite daunting.

“This is not about one industry being affected. This is about major trade lanes being affected, and we haven’t seen anything on this scale before,” van de Wouw added.

Overall, he said it was too early to predict how large of an impact the development will have. The picture will be clearer when demand figures for May are released.

Forwaders have also warned of the administrative burden of processing the shipments.

”Customs duties aside, all shipments will, as of 2 May, be subject to a standard customs clearance process, with this in itself presenting an administrative nightmare,” Scan Global Logistics said in a market update.

 

”With elevated tariffs of 145% currently in place for China, the elimination of the de minimis exemption will significantly influence pricing strategies for e-commerce platforms and consumer purchasing behaviour” the forwarder added. “Companies such as Shein and Temu, which previously leveraged the de minimis threshold to offer low-cost goods, have already announced price increases.”

Ahead of the end of the exemption, the move already seemed to be having an impact on the market, although the US has also implemented tariffs of 145% on Chinese imports – other than some other tech products that have been exempt – making it hard to distinguish how much of an impact each of the two developments are having.

Figures released today by data provider WorldACD show that in the week running to 17 April, cargo volumes from China and Hong Kong to the US were down by around 15% year on year.

Meanwhile, sources indicate that spot market rates from Hong Kong to the US have fallen by just under $1 per kg since the end of April to around $4.40 per kg today.

At the start of this week, freight forwarder Dimerco reported that from the end of April, several freighter charters have been cancelled, while further cancellations are expected in the coming weeks.

“Overall, e-commerce shipment volume has dropped by approximately 50% since mid-April compared to the same period last year,” Dimerco said.

The company said major Chinese carriers were also considering cancelling services, although a final decision is still pending.

“If these cancellations go through, the already limited capacity from China to the US will be further reduced,” Dimerco said.

There are also concerns that any capacity withdrawn from China-US services could end up in other markets, risking pulling down rates on those trades if supply outstrips demand.

Indeed, Dimerco Express vice president, global sales and marketing Kathy Liu said that much of the freighter capacity from China/Hong Kong removed in recent weeks has been shifted to destinations like Nuevo Laredo in Mexico and other parts of Latin America, where demand has actually gone up, especially out of Mexico.

Demand out of Southeast Asia and Taiwan has stayed relatively stable – that’s likely due to the 90-day tariff exemption granted by the US government, which is giving some breathing room to shippers in those regions.

The US had tried to end the exemption in February, but customs did not have the systems in place to handle the number of packages being brought into the country and had to backtrack on its decision within a couple of days.

 

Last year, around 1bn packages were transported into the US under the exemption, with around 800m of these shipments arriving through international mail; express courier services such as UPS, DHL, and FedEx; or were transported as cargo on commercial airline flights.

Washington argues that criminals are using the exemption to smuggle illegal items, such as illicit drugs and weapons, or evade paying duties.