Source: Supply Chain Dive
Date: 18th March 2025

Shippers are delaying contract negotiations, while carriers assess summer schedules, according to Xeneta.

• Trade upheaval spurred by the Trump administration’s tariff strategy is prompting air cargo players to reassess their market strategies, according to a March 6 report from Xeneta.
• Shippers are opting for short-term agreements while postponing annual contract discussions slated for Q2 2025.
• Meanwhile, carriers are assessing freighter capacity strategies as summer schedule planning approaches, Xeneta reported. Many airlines may move routes away from China and toward other parts of Southeast Asia or shift capacity to the Transatlantic market.

Dive Insight:
In January, Xeneta forecasted a 4% to 6% year-over-year increase in 2025 global air cargo demand, following a year of double-digit demand growth. Growing trade uncertainty has now clouded that outlook.

Earlier this month, the Trump administration upped its tariffs on China by 10%, building on the initial 10% increase it implemented on Feb. 4. Trump has also vowed to introduce universal reciprocal tariffs on April 2, creating further uncertainty.

The shifting tariff landscape is creating headwinds for several industries, prompting businesses to adjust supply chains to offset the impact.

“From the conversations we are hearing, some shippers are looking for ways to minimise the impact of US tariffs, while others will be anticipating lower airfreight rates if e-commerce volumes show a sustained dip,” said Xeneta Chief Airfreight Officer in the report.

The state of e-commerce
E-commerce volumes have been a primary driver of air cargo activity over the past few years. But the regular seasonal e-commerce demand slowdown at the start of the year, paired with the U.S.’ brief pause of the de minimis exemption on China-based shipments, may indicate “regulatory/political conversations are starting to affect the air cargo market,” Xeneta said.

“With general cargo demand in the doldrums in recent years, the surge in e-commerce has been the saviour of the air cargo market performance. If this now takes a significant hit, if that happens, it will have a profound effect on airfreight rates around the world,” Xeneta said.

In February alone, spot rates from Shanghai to the U.S. dropped 29% month over month to $3.23 per kilogram, Xeneta reported. For comparison, February rates from Shanghai to Europe only experienced a 2% month-over-month decline.

According to Xeneta, when the outbound e-commerce surge started a few years ago, it “clogged” the market in Hong Kong and southern China. In turn, the e-commerce market shifted toward Shanghai — despite it being a “less desirable” destination to ship from due to higher costs.

“If a fall in e-commerce volumes means there’s currently more available capacity to do business out of Hong Kong and southern China again, we would expect Shanghai to be the first market to feel this impact, and that’s what we saw in February,” Xeneta said. “This may be short-term, but the uncertainty around e-commerce is impacting the market.”

Xeneta further reported the Trump administration’s proposal to charge additional port call fees on China-built ships may temporarily drive up ocean container freight rates and prompt a modal shift from sea to air.