Source: The Loadstar
Date: 1st May 2025

Cargo airlines are scrabbling to find new markets as capacity becomes available following the end of the US de minimis exemption for China on 2nd May.

It was likely that there could be significant capacity shifts as the China-US trade lane became less attractive.

Already, seven fewer freighters a day are leaving the trans-Pacific tech stop, Anchorage, with the largest reduction to Chicago.

What we can see is that a lot of the capacity will be put back onto to Asia to Europe sectors, or maybe into Africa, maybe into South America, and on the transatlantic side as well, from Europe into the US.

At the end of 2023 and in 2024, airlines pulled capacity from the transatlantic and from Europe to South America, and put it into China and Hong Kong to profit from the ecommerce boom.

But with the tariffs coming into play, that volume of flow is likely to decline. And so there will be spare capacity being generated because there’s no more volume that goes across to the US, and people are going to put all that capacity back to where it originally came from.

While there will likely continue to be a focus on ecommerce in other regions, it may not require the same capacity.

I think there are certainly markets like South America that are underdeveloped. I think the Chinese ecommerce platforms could very well be looking at South America as an opportunity, but obviously, the logistics are challenging. To get ecommerce into South America, it’s a long way to go.

“The Middle East as well, could be another area where there is significant demand for ecommerce.” And US consumers tended to have a different buying profile than elsewhere.

But perhaps one of the most attractive markets will be India.

India is developing its production capabilities, and, for example, Apple has decided it’s going to do all the production of its phones for the US out of India. I think if that is successful by the end of next year, I see it possibly moving even more production there. So yes, India is going to be like a flame to moths –everybody is going to put capacity into that market because of the shifting trade.

At the end of the day, the market is where it is. Whether India will be another China remains to be seen.

India is a bit different from China in terms of how things get done. Not to be disparaging, but it takes a little longer in India – unless they fast-track the process – than it does in China. But one thing on India’s side is a lot of skilled people, and a lot of young people.

The uncertainty made it very difficult to make choices now.

We run various scenarios as to how the traffic flows will change, and develop responses to that.

Most of the carrier’s blocked space agreements with forwarders tended to end in the first quarter, so they are currently in the process of renewal.

But whatever happens between the US and China is going to have an impact on the shippers, and the capacities that they require to service the trans-Pacific.

“It’s a different story, however, if you look at Asia into Europe, or let’s say China/Hong Kong into Europe. The big question there is, though, is that if Europe starts being inundated with products manufactured in China specifically, what is the EU going to do about that?”