Airlines are downsizing cargo capacity now that the tariff deadlines for U.S. trade partners have passed, with third-party logistics (3PL) provider C.H. Robinson signaling a correction in the air freight market.
In July, cargo airlines had positioned additional flights and capacity to the U.S. to handle front-loading demand up until the Aug. 1, 2025 negotiation deadline to set country-specific tariffs. But with the deadline coming and going, and the separate Aug. 12 China tariff deadline getting extended 90 days, the extra capacity no longer has shippers concerned about rushing goods into the U.S.
Related Stories
“With most importers having completed inventory buildup in July, carriers now face the challenge of right-sizing capacity to match new demand levels,” said the C.H. Robinson report. “The correction is particularly evident in markets where tariff-related inventory rushing created temporary capacity shortages earlier this year. Carriers are implementing flight cancellations and route diversions to fill remaining services and maintain profitability.”
Data suggests that the air freight market hasn’t collapsed, but has remained stagnant over the past month.
According to air cargo market intelligence firm WorldACD, the two-week stretch from July 21 to Aug. 3, capacity remained flat from the two-week stretch prior from July 7 to July 20.
On a year-over-year basis, capacity numbers are still up 5 percent, the company said.
Demand, measured by chargeable weight, dropped 2 percent in the two-week-over-two-week timeline.
“The fundamental challenge has been one of timing: With new demand in July, carriers increased capacity. But importers completed inventory building earlier than expected, leaving airlines with excess capacity they must now remove to maintain profitability,” said C.H. Robinson in the update. “Asian carriers are particularly affected as the traditional peak season for electronics and consumer goods shipments to U.S. and European markets has been disrupted by the front-loading cycle, forcing airlines to reassess capacity allocation across their networks.”
Although the International Air Transportation Association (IATA) hasn’t released its July capacity and demand data yet, previous months suggested that the air freight market has continued to be bogged down by the usual market-leading Asia-to-North America trade lane. That lane was impacted not just by the on-and-off tariffs starting in April, but also the closure of the de minimis trade exemption for Chinese goods on May 2.
In May, cargo tonne-kilometers (CTK) declined 10.7 percent in the weeks after the duty-free provision was closed. The next month, cargo demand dipped 4.7 percent.
Although the Trump administration is expanding the de minimis ban to packages from all countries as of Aug. 29, roughly 60 percent of the eligible imports came from China, so any front-loading efforts related to the provision are expected to have less of an impact on demand and capacity.
Izzy Rosenzweig, CEO of e-commerce fulfillment specialist Portless, said in a recent webinar that countries like Vietnam and India were “still in the early days” when it came to direct-to-U.S. supply chains, with their de minimis-eligible freight often going to warehouses in Canada and Mexico.
“They were the biggest users outside of China using de minimis, so they kept using it post May 2,” Rosenzweig said, noting that cross-border trucking was taking more of a demand hit than air freight.
“I don’t expect a massive shift in air cargo after Aug. 29. We’re already past that,” said Rosenzweig. “Aircraft shifted more to where dollars are being spent from the big spenders, which is more into Europe.”
According to C.H. Robinson, peak season surcharges are being implemented on key trade lanes out of Asia where capacity is still tight, particularly for high-technology and time-sensitive cargo requiring premium handling. Obtaining spot space for time-sensitive cargo now requires lead times of more than one week, normalizing from the immediate space availability earlier this year when the front-loading began.
However, the jury is still out on expectations for capacity and demand, particularly until China and the U.S. officially finalize a trade deal.
“For air cargo, the U.S.-China tariff extension could mean some air cargo front-loading in late October and early November if no agreement is in place by then, as the Nov. 10 expiration would kick in just as the typical air cargo peak season would normally begin,” said Judah Levine, head of research at Freightos, in a Thursday morning update.
Levine noted that additional U.S. tariff decisions on semiconductors and pharmaceuticals are expected soon, and “depending on the details, could have implications for air cargo volume timing and levels for these sectors as well.”
