News / Shippers brace for rate rise as smart phones expected to drive air cargo market

The overwhelming majority of air cargo players, according to a new survey, expect airfreight rates to rise globally.

Nearly 95% of respondents to Ti’s sentiment survey expect further rises, particularly on Asia to US west coast. 

The possible introduction of higher tariffs looks likely to be the reason: in a survey of small and mid-sized US importers, Freightos found about half had frozen imports during tariff uncertainty, “resulting in many now fast-tracking holiday orders that may face higher tariffs in mid-August”, said the platform. “This could bolster freight rates.” 

Shippers should perhaps brace for a tightening of transpacific capacity soon: last week, Donald Trump said he would introduce a 25% levy on all foreign-made mobile phones sold in the US, including Apple units, at the end of June. The news is likely to cause a flood of phone imports into the US over the next four weeks.

There could already be pent up demand: in April, air cargo saw a 52% decline year on year in laptop and smartphone tonnages from China to the US, according to Aevean – about 100 fewer widebody freighters – and a 60% drop in value.

Globally, airfreight rates are already on the rise, according to TAC Index. Its Baltic Air Freight Index rose 0.4% in the week to 26 May – but was 5.5% lower than a year earlier. 

TAC agreed with the survey results from Freightos and Ti. 

“Some sources anticipate rates could rise further in the weeks ahead. The disruption to ocean shipping due to cancellations during the recent stand-off on tariffs between the US and China could lead shippers to turn to air cargo instead, these sources suggest, causing a ‘Covid effect’ similar to what occurred in the pandemic period, though others suggest customs issues are still causing some hesitancy on business to the US.” 

It added that there was greater activity on the spot market than usual.

“Following the cancellation of many block space agreements (BSAs) this year, there has been an increase both in spot market activity and spot rates, particularly in the past week,” said TAC. 

Rates out of China were generally higher to both the US and Europe, it said, while the transpacific was seeing general cargo, rather than ecommerce, which is “staying on the sidelines”. 

Hong Kong outbound dipped 1.2%, week on week up to 27 May, down 6.1% from a year earlier – but out of Shanghai, rates have rebounded, gaining 6.1% in the week, although that is more than 10% lower than last year. However, in the week to 23 May, Freightos said China-North America weekly prices fell 7%, to $5.14/kg. 

Tac Index reported rates out of Vietnam to the US had fallen, but held steady to Europe, while outbound India saw a slip in rates to both continents. 

Out of Europe, rates were broadly steady, but saw gains to China and falls to the US and Japan. The threat of 50% tariffs on EU goods may turn out to be nothing more than an empty threat – but if applied in July, it may result in less available capacity on the transatlantic prior to that. 

Out of North America, rates to Europe were flat, but fell to China and South America, where there has been some overcapacity. 

Last week – compared with the average of the past four weeks – freighter capacity between South and North America fell between 11% and 15%, according to Rotate. Asia to North America rose 8%.