News / Race to get goods out of Asia to the US by air as July deadlines loom

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Demand may have plummeted on ocean transpacific lanes, but there is still just about time to fly goods to the US before the two looming deadlines: 4 July celebrations and 9 July tariff changes. 

But their origin is not China: that market, say forwarders, has tumbled. But elsewhere in Asia is pretty busy, explained Kathy Liu, VP global sales and marketing at Dimerco Express Group. 

“We are seeing a lot of freight needing to be shipped out of Asia into the US by the end of June. There’s a capacity issue, especially out of South-east Asia, because normally it does not have sufficient capacity to support sudden growth.” 

Intra-Asian capacity does seem to be edging up, by 1% in the week to 22 June, compared with May’s average, and another 1% in the past 72 hours, according to Rotate’s live capacity database. 

Ms Liu said there was high demand out of Taiwan in particular. 

“From now until the end of June, beginning of July, the demand will be very strong out of Asia, especially South-east Asia and Taiwan. We have seen that the airfreight rate out of South Asia and Taiwan is going up a lot.” 

She explained that the norms had been switched. 

“Out of China, there is still not that much demand, with ecommerce not that strong anymore. In previous years, China’s rate was higher compared with South-east Asia and Taiwan. But this year, their rate is higher, outbound.” 

Demand from Taiwan is mainly driven by AI servers. She said: “There is very strong demand for AI servers in the US market, including Amazon, Google, Meta. Another reason is that some Taiwanese manufacturers have been producing in China, but because of the tariff issues they are bringing back the production lines to Taiwan.” 

The trade war has also triggered more intra-Asian demand, she said. 

“The intra-Asia market is very busy, including China with other South-east Asian countries, in part because of the shifting of the production lines from China to South-east Asia, and the China-plus-one strategy. Some of those key raw materials or components are made in China and we need to move themto those South Asia and Taiwan manufacturers.” 

According to Freightos’ FAX, rates from southern Asia to South-east Asia saw a spike at the end of January, another at the end of February, and have been broadly rising since, to $1.29 per kg yesterday. 

“Compared with the same time period last year, the rate is at a high level,” added Ms Liu. 

But she said demand was also strong into other markets, with customers developing new customers outside the US. 

“Some of them are searching for the new markets. This year we see a lot of growing demand into Latin America, especially Mexico and Brazil, for automotive parts, aerospace, electronics.” 

Meanwhile the past week has seen significant changes in the Middle East, with capacity down 4% to Asia and to Europe, following airspace closures. 

A letter to customers from Engr Badr Mohammed Al-Meer, group CEO of Qatar Airways, revealed the huge significance of airspace closures due to Middle East hostilities. 

“This week brought an operational crisis few airlines will ever encounter, and one that challenged the very core of what it means to run a global airline,” he wrote. 

As airspace was closed, nearly 100 aircraft were en route to Doha. “25 flights diverted into airports across Saudi Arabia, 18 into Turkey, 15 into India, 13 into Oman, and five into the United Arab Emirates. The remaining aircraft were re-routed to major hubs including London, Barcelona, and others across Europe, Asia and the Middle East.” 

Surprises like that added to the current uncertainty for airfreight forwarders and their customers, said Ms Liu. 

“For the second half of the year, we see a lot of uncertainty, like the crisis in the Middle East. You never know what will happen there. And this will impact the freight forwarding market a lot, especially for shipments into Europe.”  

Inventory levels are also unclear following front-loading, she added: “Because of the current issues, people have cancelled individual orders to ship out in one batch. 

“Normally you know when there will be a peak season, when it will be slow; but this year is completely unpredictable.”