Air Cargo

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Asia-Europe air demand soars , ‘ de minimis ’ scrutiny hampers trans-Pacific

By Greg Knowler

Air cargo rates and tonnage from Asia to Europe picked up sharply in October as rising demand for e-commerce shook off the slow buildup to peak season that typically follows China ’ s Golden Week holidays .

But the recent rise in volume to Europe contrasts sharply with China – US tonnage that in the second half of 2024 has fallen far below year-over-year levels following greater scrutiny by US authorities on imports using the so-called “ de minimis ” exemption from duties .

“ That decline appears to have been triggered by tighter customs rules and checks since July on inbound US air cargo traffic from China , especially at Los Angeles airport ,” air freight analyst WorldACD said in a market update Oct . 25 . Data shows China-Los Angeles tonnage for the week ended Oct . 20 ( week 42 ) was down 37 % year over year .

A large portion of e-commerce shipments are routed through Hong Kong , and with global online shopping promotions such as China ’ s Singles Day , Black Friday and Cyber Monday just around the corner , as well as several new smart phone launches , rates and demand have begun to rise , significantly so on the China – Europe trade lane .

Air cargo volumes from China to the US tumbled 18 % in October amid heightened de minimis scrutiny . cowardlion / Shutterstock . com

“ The consistent strengthening of the Hong Kong-to- Europe market in the last six weeks , despite the normally dampening effects of China ’ s Golden Week holiday period at the start of October , is one of the earliest and only indicators of a potential significant fourth quarter air cargo peak season emerging this year ,” WorldACD said .

Average spot rates from Hong Kong to Europe rose to $ 5.15 per kg for the week ended Oct . 20 , with China – Europe spot rates at $ 4.29 per kg . Both trade lanes are 13 % above last year ’ s levels .

Tonnage from Hong Kong to Europe in week 42 was up 25 % on the already strong levels in the same week last year , with tonnage through the first three weeks of October up 12 % sequentially compared to the average weekly volume moved in September .

The Baltic Air Index ( BAI ) assessed average spot rates from Shanghai to North Europe at $ 4.52 per kg , the highest rate level on the trade lane this year and up 19 % on the same week in 2023 .

An ‘ unusual ’ peak season

Bogen Chi , director of air freight at C . H . Robinson , said the elevated air freight demand that has continued for three quarters shows no signs of slowing as the end of year approaches .

“ Booming demand for e-commerce from Asia , air diversions from disruptions in the Red Sea and shippers using air to mitigate the effects of the US East and Gulf coast port strike have all contributed to the usual peak season ,” Chi said in a late-October customer advisory .

Although Asia – US air cargo demand has risen steadily since the Golden Week holidays , China – US tonnage alone was down 18 % year over year in October , part of a wider pattern of a decline in tonnage on the trans-Pacific in the second half that WorldACD believes was triggered by growing US scrutiny on e-commerce imports .

The White House in July proposed a rule that would apply section 301 tariffs to de minimis shipments , a part of US trade law that allows single shipments valued at less than $ 800 to move duty-free and with fewer data submission requirements . Currently , section 301 tariffs cover approximately 40 % of US imports from China , including 70 % of Chinese textile and apparel imports .

Although the $ 800 threshold has not yet been lowered , Chi warned air freight importers to keep regulatory and compliance issues on their radar .

“ With the upcoming US election and new security measures anticipated across Europe , more regulatory shifts are likely on the horizon in 2025 and could have an impact on capacity ,” he said .

“ For example , should the de minimis threshold be lowered , air capacity would likely open as most of the e-commerce freight using air now would be at risk of being held at the border ,” Chi added .

If capacity is released into the market , it would ease the limited space and lower rates from currently elevated levels , leaving shippers with fixed-rate agreements or chartered-in capacity stuck on prices above the prevailing market .

email : greg . knowler @ spglobal . com

36 Journal of Commerce | November 18 , 2024 www . joc . com