News / Airlines slash freighter capacity post-de minimis, but 'the worst is yet to come'

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Airlines have already significantly cut freighter capacity since last week’s de minimis change in the US, and there will likely be more to come, warned Derek Lossing, founder and senior industry advisor of ecommerce and transportation at Cirrus Global Advisors (CGA). 

CGA reported yesterday there had been an average of 19 fewer aircraft every day into the US after Friday’s revocation of de minimis privileges for packages valued at less than $800 from China and Hong Kong. 

“This is in addition to UPS and FedEx reductions in flight schedules during the same period,” it added. “However, we do not look at their [integrator] flights, as they are less likely to adjust their small package network, due to their customer base.”   

CGA calculated a reduction of some two million kg of air cargo capacity a day into the US via aircraft from Asia.  

“Final-mile carriers have been quietly and confidentially reporting a massive collapse in last-mile parcel volumes, and for the flights that are operating, we cannot ascertain how full they are, but suspect that, considering FedEx and UPS are reducing flights as well, the impact is well beyond those [carriers] that are directly exposed to traditional B2C e commerce,” it said.  

According to Rotate’s Live Capacity Database, capacity from China and Hong Kong to the US has declined 30% in the last 24 hours compared with the same 24 hours a week ago.

“Week-over-week comparisons no longer cut it as we’ve entered the second week of capacity declines. Since US de minimis exemption rules ended, Asia to North America freighter capacity has dropped by roughly 4,000 tonnes a day,” said Tim van Leeuwen, VP and head of consulting at Rotate.

Mr van Leeuwen said this equated to some 40 freighter flights per day and 40% of previously operated freighter capacity.

Mr Lossing told The Loadstar: “Many of the flights between Asia and the US stop in Anchorage (ANC). So, we use Anchorage as a benchmark of how much flight capacity there is. As soon as we see a sizable change in the freighter activity at ANC, that’ll be a good testament to how much capacity is coming out and how much gets cancelled.” 

Indeed, just two days after de minimis was removed, Anchorage to US freighter departures had declined by 38% – translating to some three million parcels removed from the market. 

Average freighter departures from ANC to Chicago O’Hare prior to the de minimis change was 24 a day, which drastically fell to 14.3 by 4 May.  

ANC to JFK’s daily average of 9.7 freighters dipped to just five, while the daily average to Miami International fell 0.6 and to Dallas Fort Worth from 4.3 to 2.3.  

CGA added that on the backhaul routes, there had also been a “consistent reduction” in flights to China from ANC. 

And Mr Lossing told The Loadstar the worst might still be yet to come, as “there’s lots of challenges with short-term cancellations”. 

He explained: “If you think of an airline like Korean, in the short term if they were supplying, let’s say, four flights a day to the US on their freighters, they might have scheduled three, but they also have high fixed costs. So, they’re not going to necessarily just cancel two, because they’ve still got to pay for the pilots, they’ve still got to pay for the aircraft maintenance.  

“So, it’ll be interesting. But if people see what I’m seeing on the Temu website today, where your $19 power-strip becomes $48, there’ll be a lot fewer airplanes flying to the United States,” Mr Lossing concluded.