Air cargo demand grew by a modest 0.8 percent in June, held back heavily by North American airlines on global routes, which contracted 6.1 percent year over year.
In a monthly market analysis, the International Air Transport Association (IATA) attributed the paltry growth to U.S.-enforced tariffs, which have delivered uncertainty across global trade flows.
Freight benchmarking platform Xeneta reported similar numbers for June, with a 1 percent year over year jump in volumes.
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“The June air cargo data made it very clear that stability and predictability are essential supports for trade,” said Willie Walsh, IATA’s director general. “Emerging clarity on U.S. tariffs allows businesses greater confidence in planning. But we cannot overlook the fact that the ‘deals’ being struck are resulting in significantly higher tariffs on goods imported into the U.S. than we had just a few months ago.”
The Asia Pacific Freight report from international freight forwarder Dimerco Express Group indicated that shippers are unsure on how to plan their shipping schedules as original reciprocal tariffs on countries that haven’t struck a new trade deal with the U.S. go back into effect Friday. The report noted that this rings especially true for markets like Singapore and India, with President Donald Trump already slapping a 25 percent duty on the latter ahead of a new agreement.
In the months prior, airlines have had to adjust accordingly. Carriers like UPS, which saw China-to-U.S. volumes sink nearly 35 percent across May and June due to briefly elevated tariffs and the end of the de minimis trade provision, have been adjusting to the new trade order by redeploying capacity on other routes.
According to IATA, the Asia-to-North America corridor remains the “most concerning” of all lanes since it has contracted for the second consecutive month. It is the largest and most active cargo route, with total trade flows dropping by 4.7 percent in June.
The drop is an improvement from the annual drop recorded in May, when cargo tonne-kilometers (CTK) declined 10.7 percent in the weeks after the duty-free de minimis exemption was closed to Chinese goods.
Fashion, consumer goods, technology and electronics that were typically shipped between April and June ahead of the summer retail cycle, were largely front-loaded this year, as shippers accelerated deliveries to avoid the impact of incoming tariffs.
The IATA said other goods are currently facing shipment delays, in some cases because production has relocated to countries with more favorable exporting conditions.
For North American airlines, June performed worse than May, with a 2.3 percentage point sequential decline from the previous month.
“The economic damage of these cost barriers to trade remains to be seen,” Walsh said. “In the meantime, governments should redouble efforts to make trade facilitation simpler, faster, cheaper and more secure with digitalization.”
International airlines kept the wider total afloat, with a 1.6 percent annual increase in CTKs.
Air cargo growth is still robust for airlines out of the Asia Pacific region at 9 percent year over year, showing a slight 0.3 percentage point increase from the prior month. European airlines saw a 0.8 percent annual increase, down 0.4 percentage points compared with May.
Global air cargo capacity jumped 1.7 percent year over year to reach 51.4 billion available cargo tonne-kilometers (ACTK) in June. Capacity was reduced by 2.2 percentage points compared to May, in what IATA calls “a clear sign of capacity adjustments to accommodate air cargo’s softer demand.”
Capacity from North American airlines decreased by 5.1 percent year-on-year, the largest decrease among all the trade lanes.
Cargo yields reported a 2.5 percent year-over-year decrease, IATA said. However, the market has absorbed part of the initial shock, slightly rebounding 0.9 percentage points compared to May.
Xeneta calculated that air cargo spot rates dropped 4 percent year over year, marking the second straight month of declines tracked by both the firm and IATA.
According to Xeneta, supply of capacity overtook demand for the first time in 19 months.
“It’s wrong to think falling air cargo rates on key trade corridors automatically represent a boon for shippers. With weaker consumer confidence, low rates are little comfort when underlying demand is deteriorating,” said Niall van de Wouw, Xeneta’s chief air freight officer, in a blog post on July 4.
Fuel prices play into the rate declines. The June jet fuel price was 12 percent lower than the year prior, a fourth consecutive year-over-year monthly decline, IATA said.
