Trans-Pacific Air Cargo Hitting Wall after De Minimis Rule in the US Fades - May 6 Update

Our firm has estimated a $22 Billion USD impact to the air cargo industry in the next three years, tied to a combination of high tariff rates and the cancellation of the de minimis customs process. In this post, we will take a quick look at where air cargo capacity stands after the rule took effect at 12:01am EST on May 2nd.

We look at this a few different ways. First, we need to understand that there are two types of flights operating from Asia to the US. First, the Express Carriers. These are generally considered UPS, FedEx, DHL, and SF Express. SF Express is small relative to the others. DHL has a number of various carriers including Polar Air Cargo, Singapore Airlines, and Kalitta that do flying for them, so their capacity isn't as easily traced as UPS and FedEx. UPS was generally flying about 10 weekday flights a day from Asia to the US via Anchorage, and that has dropped to about 7-8. FedEx was also flying about 11 weekday flights, and has since dropped to 8-9. Again, we are only four days into the new laws- two of which were weekend flying which integrators naturally are scaled back, so it is too early to see how much capacity they will remove.

While Both UPS and FedEx have seen a reduction in flying, although the reductions are not consistent enough to infer long term schedule changes, yet. The Eastbound ANC-USA flying is down over 21 freighters a day, consistent with our insights posted recently on LinkedIn, of 2.5M Kgs daily removed from the market. Return flights (stopping in ANC) to Asia & China, are both down, with Asia flights down about 25% per day and China/HKG down over 50%. 

In the same four days in the week prior to May 2nd, we had 66 flights a day to the US from ANC, and the four days post de minimis closure, we are now seeing 44.5. This is a 21 flight per day reduction. In addition, we are seeing additional flight reductions on China to LAX freighters that bypass Anchorage Airport. LAX was experiencing about 14 arrivals from Asia a day, and that has been reduced to about 9. So, in total, we are seeing about 26 less freighter operations, or roughly 3MM kgs a day.

Airline Specific Insights: Kalitta Air has been hit the hardest, presumably they were flying more charters leading up to May 2; their WoW flight operations are down (-5)/day. Atlas Air (-4), Air China Cargo (-2.5), UPS (-2), FDX & Korean (-1.25) & China Southern (-1) all have notable daily reductions.

As is expected, airports outside of China and HKG are fairing better, although even airlines like Korean Air have reduced flying due to their exposure to China goods. Flights to Tokyo, Taiwan, and Osaka have all faired well.

Conversely, flights to Nanjing, Hefei, Wuki, Shenyang, Ningbo, Xiamen, Zhengzhou, Hangzhou, and Chengdu have significantly reduced. We are also seeing sharp declines at Ezhou. Hong Kong and Shanghai-Pudong are the largest China volume origins.