Forwarders’ Forum: Air cargo peak season vanishes amid e-commerce demand

The air cargo industry is witnessing a profound transformation. Historically marked by distinct peak seasons, the sector is now experiencing year-round demand, driven predominantly by the unrelenting growth of e-commerce. This shift is altering traditional logistics patterns and challenging existing infrastructure, prompting opportunities and complexities for airfreight forwarders. [caption id="attachment_93852" align="alignright" width="213"] Brandon Fried, executive director of the Airforwarders Association[/caption] One significant driver behind this relentless demand is the U.S. de minimis policy , which allows goods valued at less than $800 to enter the country duty free. This policy has catalyzed the surge in e-commerce activity. It has particularly benefited Chinese online retailers such as Shein , Temu and Alibaba , enabling them to flood the U.S. market with small parcels without incurring hefty tariffs. As a result, e-commerce now constitutes about 20% of global air cargo volumes, with the trans-Pacific routes seeing an astonishing 60% to 70% share. Cracking down on de minimis This boon for e-commerce has not gone unnoticed by U.S. policymakers and regulators. In Washington, legislative efforts exist to lower the de minimis threshold or to exclude goods from China from qualifying for this duty-free status. These proposals aim to curb the overwhelming influx of low-value goods from China, protect domestic businesses and potentially reduce the strain on the air cargo system. U.S. Customs and Border Protection (CBP) recently confirmed that it is cracking down on e-commerce to ensure that all shipments comply with federal import regulations and all customs brokers are compliant with the de minimis requirements. The intermediaries targeted by CBP’s recent actions complained that the agency provided little detail and an insufficient opportunity to correct procedures before they lost their import processing privileges. Highs and lows flatten into steadiness Despite recent regulatory enforcement and potential legislative changes, the air cargo landscape remains one of high demand and elevated rates. Typically, the summer months are softer for airfreight but this year they have been anything but. The demand for air cargo transportation has soared, driven by e-commerce fulfillment from China and proactive shippers moving holiday orders forward to mitigate against rising costs, capacity shortages and ocean shipping delays. In addition to the e-commerce surge, retailers are concerned about a potential longshore work stoppage at the U.S. East Coast and Gulf ports. This worry is causing businesses to demand ocean capacity early, making sure their products don’t miss the Christmas season. As we witnessed during the pandemic, insufficient ocean capacity and increased rates make air cargo an appealing alternative for store owners attempting to avoid holiday disruptions. Air cargo market grows Air cargo volumes remain significantly elevated from key Asian and Middle Eastern origins, particularly to Europe. This surge is partly due to the cascading effects of the Middle East conflict , which has led to the effective closure of container lines’ Red Sea routes, further straining port productivity. Consequently, businesses are increasingly shifting their loads to air cargo to circumvent these disruptions. Airlines are now more reliant on business from China’s online retailers than ever before. Online fashion giant Shein and other major e-commerce platforms continue to push parcels directly to consumers, maintaining high volumes throughout the year. This enormous trend is pushing e-commerce platforms to significantly plan increases in their capacity needs in the coming quarters. Whether this persistent market growth signals an impending massive peak shipping season starting in mid-September or it is borrowing from future demand remains uncertain. However, air logistics professionals had initially projected a modest growth of 3.5% to 4.5% for 2024 from the previous year. Instead, chargeable weight has increased by double digits for six consecutive months, with few signs of abating. Global demand for air cargo jumped 12% year over year in May, with spot rates rising consistently. Spot rates registered a 9% increase to $2.58 per kilogram, marking the second consecutive monthly growth, according to ocean and airfreight rate analytics platform Xeneta . IATA also confirmed this trend, reporting an 11% YoY increase in demand for April. Shift from ocean to air We see the surge in air cargo demand reflected in the broader economic indicators. The Purchasing Managers’ Index for new export orders in global manufacturing has shown steady growth and industrial production remains robust. However, deteriorating port conditions and rising ocean shipping rates have pushed more cargo to air, exacerbating capacity constraints and driving up costs. The imbalance between demand and available capacity has led to a spike in container rates, which are now significantly higher than seasonal norms. As ocean shipping becomes more expensive, the gap between air and ocean freight narrows, making airfreight more attractive for many shippers. New normal without peaks E-commerce volumes dominate air cargo, often bumping general cargo out of prime slots. Platforms like Shein and Alibaba have secured long-term space allocations, ensuring their dominance in the airfreight market. This prioritization forces lower-yield cargo to alternative routes and modes, further straining global logistics networks. The air cargo industry’s reliance on e-commerce reshapes logistics strategies and market dynamics. With legislative changes on the horizon and ongoing global disruptions, the future of air cargo will likely continue to evolve in response to these pressures. For now, freight forwarders and the air cargo industry must adapt to a new reality where peak seasons may become a relic of the past, replaced by a constant, high-demand environment driven by the digital marketplace. Brandon Fried is the executive director of the Airforwarders Association.

Forwarders’ Forum: Air cargo peak season vanishes amid e-commerce demand

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