Cargo Chat: Geodis predicts general air cargo rebound

The May 2 end of United States’ de minimis exception for goods from China and Hong Kong has led to “low volumes, excess capacity and even lower rates,” Joe Kronenberger, senior vice president of airfreight for the Americas region at freight forwarder Geodis, told Cargo Facts .

But this sets the stage for general air cargo to rebound while e-commerce recedes, he said.

[caption id="attachment_57289429" align="aligncenter" width="1920"] Joe Kronenberger, senior vice president of airfreight for the Americas region at Geodis. (Courtesy/Geodis)[/caption] Under de minimis regulations , companies shipping goods into the U.S. were not required to pay tariffs on shipments valued at less than $800.

Postal items from China and Hong Kong that would previously have been covered by de minimis are now subject to a duty of either 30% of their value or $50 per item, whichever is higher. This will greatly affect e-commerce from China to the U.S.

“A great percentage of growth for airfreight has come from e-commerce in recent years, meaning airfreight will have to start growing in other verticals to accommodate for steadily dropping volume, capacity and rates,” Kronenberger said.

The U.S. also imposed a flat 10% tariff against all countries, effective April 5, except for China. The U.S.’s tariff against China is now 30% and China’s against the U.S. is 10%.

Kronenberger spoke with Cargo Facts about the turbulence in store for the air cargo industry with the end of de minimis, how tariff negotiations can smooth fluctuations in rates and capacity, and how freight forwarders should approach the ever-changing trade policy landscape.

What follows is an edited version of the conversation.

Cargo Facts : How have you seen airfreight rates change leading up to the end of de minimis and now that it has ended for China?

Joe Kronenberger: Industrywide, we saw a big surge of tonnage in March and the beginning of April with shippers and companies coordinating to get ahead of the increased tariffs and the end of the de minimis exemption for low-value imports from China. Since then, airfreight rates have been slowly dropping for imports and exports. The end of de minimis on May 2, paired with the Chinese Labor Day holiday in early May, led to low volumes, excess capacity and even lower rates.

Naturally, trans-Pacific westbound rates have been impacted the most. Depending on where aircraft are redeployed, additional capacity on other routes will likely lead to rate decreases in those areas as well. We expect rates to stay low with the end of de minimis, though we are already seeing both rates and volumes increase since [the] announcement on tariff changes between the U.S. and China that went into effect on May 14. We will likely see rates continue to increase, or at least stabilize, over the next ninety days because of this.

CF : How do you believe these trends will play out in the coming months?

JK: General cargo was pushed out of airfreight with e-commerce growth over the last five or so years, so now that prices have come down, there’s a possibility of a reentry into the marketplace for some shippers.

In the long term, it will take time for shippers and companies to change their routes and move production out of China, so we expect rates to stay low and continue down that trendline.

In the short term, we anticipate general cargo will rebound as both U.S. importers of Chinese goods and Chinese importers of U.S. goods will largely look to bring in freight during the next ninety days to lock in a lower duty rate as negotiations between the two countries continue.

CF : What advice do you have for shippers trying to navigate the ever-changing tariff environment and the end of de minimis for China?

Despite changes that can be abrupt and unpredictable, it’s important to think about the long term and make proactive decisions to build supply chain resilience. As we’ve seen, tariff and trade policy updates can happen quickly.

Working closely with licensed customs brokers and other trade compliance professionals who ensure goods comply with necessary laws and regulations is one of the best ways to stay updated. Having real-time guidance is critical, especially when it comes to navigating a company’s unique needs based on tariff impacts, regulatory changes and alternative sourcing strategies.

Beyond compliance, if they haven’t already, shippers should be conducting a supply chain audit into sourcing, including the percentage of each component and potential tariff impact at every stage of the supply chain. This will enable optimized product classifications and documentation to mitigate import duties, prevent misclassification issues and reveal cost-saving opportunities.

From there, shippers can explore alternative sourcing strategies to reduce tariff exposure if it makes sense for their business. Shifting suppliers isn’t an overnight process, but taking a structured approach can help reduce reliance on high-risk regions. Above all, businesses that stay informed and maintain strong relationships with trade experts will be best positioned to smoothly navigate changes.

CF : How will the 10% flat tariffs affect the supply chain?

JK: Supply chains are inherently flexible, so 10% flat tariffs should be a manageable situation for most shippers. Production or other points in a company’s supply chain will absorb a few percentage points, and the customer may absorb a few percentage points, but overall, business will go on. For much higher tariff rates, such as the previous 145% reciprocal rate on China, that’s where significant supply chain challenges can appear.

Additionally, companies and consumers reach a point where they can’t easily absorb the extra cost as it’s too great. Impacts from high tariffs like this mirror what we’re currently seeing with airfreight rates dropping as companies seek out alternative shipping, production and sourcing solutions.

CF : How will the end of de minimis for China affect the supply chain?

JK: [It] will have lasting impacts as airfreight rates reset and capacity is redistributed to other areas, like general cargo, which has been historically flat since the rise of e-commerce. We may see some reprieve in e-commerce volumes over the next ninety days.

We anticipate the ninety-day period will boost general cargo volumes, but it’s likely to be less on the e-commerce side.

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