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US tariffs on Chinese exports could increase air cargo volumes

THE implementation of a fresh round of US tariffs on Chinese exports could boost air freight markets in the run-up to the traditional peak season later in the fourth quarter as shippers scramble to beat the deadline

US tariffs on Chinese exports could increase air cargo volumes

THE implementation of a fresh round of US tariffs on Chinese exports could boost air freight markets in the run-up to the traditional peak season later in the fourth quarter as shippers scramble to beat the deadline

29 September 2019 - 19:00

THE implementation of a fresh round of US tariffs on Chinese exports could boost air freight markets in the run-up to the traditional peak season later in the fourth quarter as shippers scramble to beat the deadline.

'We expect demand to pick back up leading into the October 15 tariff deadline,' Flexport executive vice president Neel Jones Shah was quoted as saying in a report by New York's FreightWaves. He noted that capacity ex-Asia is currently available on most primary lane segments, with backlogs minimal.



'While US consumer spending is still strong, the impact on peak season and holiday shopping toward late November, early December isn't clear yet,' said Mr Shah.



'Overall air cargo rates and demand haven't been as robust as last year and it can best be described as choppy,' he said.



'Across the board we've seen that everyone is being cautious with air freight planning. Unrest in Hong Kong, a potential no-deal Brexit and renewed Middle East hostilities all on top of the ongoing tariff war is making it much harder for carriers and shippers to plan accordingly.'



He believes that shippers should expect higher fuel bills to be passed on by carriers after crude oil prices spiked following drone attacks on Saudi Arabia's main oil refinery.



'Airlines will be heavily impacted as oil prices increase,' he said. 'In turn, they'll likely be passed onto shippers.'



US and European importers are heavily reliant on critical and high-value cargoes uplifted at Asia's primary hubs, including Hong Kong International Airport (HKIA). Disruptions due to protests at HKIA and reduced slots at some Chinese airports have added complexity to an already volatile 2019. Mr Shah said the 'choppy' demand evident globally was equally apparent in Asia.



'We saw a 'mini peak' at the end of August ahead of the September 1 tariff deadline. Since then, things have cooled down,' he explained.



One bright spot has been Southeast Asia, where demand has been relatively stable as shippers shift production to escape the tariff war affecting exports from China.



'However, yields are still a challenge and many freighter carriers are still having a hard time making direct Vietnam flights work without stopping in another city before continuing on to a transfer hub,' he added.


WORLD SHIPPING

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