News / A new trade war with US would threaten China’s 'historic' airfreight boom

Photo: © Americanspirit

China’s civil aviation authority may be talking-up its “historic highs” in airfreight volumes over the first nine months of 2024, but the looming inauguration of Donald Trump as US president has left some suggesting the boom is reaching its apex.

Between January and October, Civil Aviation Administration of China (CAAC) recorded some 7.3m tonnes of cargo and mail flown, a 19.3% uptick on 2019.

Spokesperson Shang Kejia added that this “historic peak” had been fuelled by “robust growth” in international airfreight, and cited a 48.5% surge in volumes, which hit 2.93m tonnes, heading to export destinations.

Furthermore, the CAAC pointed to year-on-year growth of 100.4% on cargo flights heading to international destinations in the last week of November.

“The surge in air cargo comes against the backdrop of China’s industrial transformation, deeper belt-and-road cooperation, and the rapid development of cross-border e-commerce,” the CAAC official continued.

However, concerns have been raised over the long-term viability of China’s airfreight sector as the spectre of Donald Trump and tariffs looms ever larger.

And e-commerce looks particularly at risk, with more than a third (35%) of Chinese e-commerce volumes moving by air to the US, with a further 25% heading to Europe, largely going through Germany.

Mr Trump has homed-in on Chinese e-commerce imports into the US as a particular bone of contention, claiming it bears the blame for the spike in fentanyl use across the US.

This is, in part, down to the ease with which those selling the illegal drug can acquire its ingredients on e-commerce platforms, which are set to be hit by Mr Trump’s intention to stick an additional 10% on top of any existing or newly imposed tariff on all imports from China.

But while fentanyl may have received the attention, the tariffs policy will also negatively impact the flow of fast fashion, particularly from Chinese e-tailers like Shein and Temu. Both have seen revenue shoot up as a consequence of their ability to secure cheap capacity for the cheap, or fast, fashion consumers in North America and Europe have become addicted to.

A report from the US National Retail Federation, criticising the revival of Mr Trump’s more aggressive form of protectionism, says it will be US consumers that suffer from any tariffs.

“Consumers would pay $13.9bn to $24bn more for apparel; $8.8bn to $14.2bn more for toys; $8.5bn to $13.1bn more for furniture; $6.4bn to $10.9bn more for household appliances; $6.4bn to $10.7bn more for footwear and $2.2bn to $3.9bn more for travel goods,” the report claims.

However, David Jack, an economics professor at Singapore’s Yale NUS College, told Business Insider the impact would not purely be borne by US consumers. He said: “It is hard to think of any scenario where the fast-fashion industry completely escapes revived US protectionism. Because their supply chains originate in China, Shein and Temu are likely to receive even great scrutiny and suffer higher tariffs.”

Were there not an alternative for European and North American consumers, the impact borne by them would obviously be high, but India has rapidly positioned itself to fill this spot.

All of this leaves question marks over the long-term viability of China’s recent airfreight boom, with a recent update from Dimerco suggesting the surge could in part be driven by a desire by shippers to front-load and get ahead of potential tariffs.

Dimerco Express Group’s VP of global sales and marketing, Kathy Liu, told Stat Times that the November airfreight scene had started out relatively calm,  but market momentum increased “from 18 November, with rates to the US and EU increasingly significantly”, with Dimerco’s update suggesting logistics networks would “begin to feel the pinch from the rush” to get ahead of tariffs.