Air cargo capacity on the transpacific lane has dropped sharply in the past week as airlines adjust to declining volumes following the end of the US de minimis exemption for low-value packages from China.
According to Tim van Leeuwen, Vice President and Head of Consulting at Rotate, transpacific freighter capacity fell by approximately 40 freighter flights per day compared to the April average. This equates to a loss of around 4,000 tonnes per day or 40% of the previously available capacity on this route.
In a LinkedIn update on Tuesday, van Leeuwen noted that some of this capacity appears to have been redirected to North America–South America routes to support demand during the Mother’s Day flower season. Data from Rotate shows widebody freighter capacity on that corridor has increased by 20% southbound and 23% northbound compared to the previous month’s average.
Despite this partial redeployment, van Leeuwen said that a significant portion of the widebody freighter fleet has simply been grounded.
“The situation is unlikely to change quickly for carriers, who will be assessing options for redeployment at the moment. The general strategy seems to be to not fly, with global freighter capacity down roughly 10% on last week,” he stated.
Supporting this, Rotate data indicated that close to 50 large freighters—Boeing 777s and 747s—had not flown any missions for at least three days as of earlier this week. These aircraft, representing around 10% of the global large freighter fleet, are predominantly operated by carriers active in the transpacific market.
“Rotate’s strategy consulting team has looked at the inverse of our Live Capacity data to see which aircraft are not flying, and found that 46 aircraft registered their last landing between April 30 and May 3, thus not operating for at least 60 hours,” van Leeuwen explained. “This confirms our observation that airlines’ strategy for dealing with lower transpacific demand seems to have been ‘fly less,’ rather than ‘fly elsewhere.’”
He also suggested that some aircraft may be undergoing maintenance during this lull in demand, but raised the key question: “What do these aircraft do next?”
On the demand side, early indicators also show a downturn. WorldACD data revealed that in week 18 (ending May 4), chargeable weight from China and Hong Kong to the US was down by 14%. In comparison, overall chargeable weight from China and Hong Kong fell 3% during the same period.
“There seems to be a big difference in the relative performances of those markets,” WorldACD noted in its weekly report. “This suggests that the changes in the China–US de minimis rules are already having a significant effect.”
Spot market rates from China to the US also continued to slide, falling for the fourth consecutive week. In week 18, rates dropped 9% to $3.85 per kg.
Still, analysts believe the full market impact is yet to be seen.
“The ending on May 2 of de minimis import reporting and fee exemptions for goods from China and Hong Kong to the US looks set to have a very big impact on air cargo markets,” WorldACD added. “Several reports indicate that dozens of weekly transpacific freighter services have been cancelled, suspended, or shifted to other markets such as the transatlantic. But the full effects are likely to become clearer in the figures for week 19, when a full week of post-de minimis data is available.”