U.S. protectionist policies have not so
far had a major impact on air freight trade flows, but that could
change in the near future depending on which additional Chinese products
become subject to import tariffs later in the year.
A first raft of U.S. tariffs on Chinese
imports came into effect on 6 July, but although there was some anecdotal
evidence of shippers moving cargo early to avoid the tariffs, an anticipated
surge in volumes flown to avoid tariffs on deadline day did not materialize
to the extent that some analysts had predicted.
with further rounds of Sino-U.S. tariffs scheduled for later in the year,
trade flows could be subject to flux unless a trade settlement can be
reached by the two governments.
“So far we have not seen nor heard
anything indicating major volume shifts in July, although, the summer
months are typically slack time for airfreight relative to spring and
fall,” said Brandon Fried, (left) Executive Director of Washington-based
The Airforwarders Association.
“Most of our members seem to be taking
a ‘wait-and-see’ approach, wondering if cooler heads will
prevail and how much of the situation is political posturing, and if so,
when will it end.”
Gary Dale Cearley, (right) Managing Director,
Advanced International Networks Ltd, told FlyingTypers that so
far air cargo had not been hugely impacted by the tariffs. “The
one area that I see so far that would affect the air cargo demand would
be the tech sector, specifically aerospace, communications technology
and information technology,” he said. “But air cargo commodities
aren’t really that much affected. Most of the targeted commodities
by the U.S. such as steel and aluminum normally go on ocean cargo.”
announcing Q2 results, managers at Swiss forwarder Panalpina noted there
had been a slight slowdown in volumes around the July 6 U.S.-China tariff
deadline, although it was unclear if this was a direct result of the tariffs,
due to accelerated volumes in anticipation of the tariffs, or due to the
normal seasonal lull ahead of peak season. Panalpina said it was not strategizing
for lower U.S.-China volumes in the future, but did expect air freight
rates to increase.
“We have not seen the impact of tariffs
on commodities that typically move via airfreight, but if the dispute
escalates then all bets could be off, and airfreight could either increase
or decrease - and likewise for domestic airfreight,” said Brian
Bourke, (right) Vice President, Marketing, SEKO Logistics. “It is
too hard to tell at this point, but it is certainly a wild card that is
leading us right into what will certainly be another interesting Q4.”
See You In
The picture was much the same in shipping.
According to container analyst Drewry, although there were reports of
shippers bringing forward cargoes as a pre-emptive move ahead of tariffs
- and U.S. imports certainly surged in June - the analyst said it was
too early to draw conclusions about shipping patterns.
“It is possible that shippers did
indeed expedite some cargoes when the U.S. tariffs were first announced
in mid-March, but when it later became clear that the actual list of affected
goods were largely non-containerized, normal service was resumed,”
“It remains to be seen whether the
same phenomenon occurs if and when the proposed second wave of tariffs
affecting $200 billion of Chinese exports - inevitably involving more
containerized goods - is approved and comes into effect in September.”
Catch A Wave?
This second wave of 10% import duties is
set to be applied to 6,000 product sub-headings, including consumer goods
such as food products and handbags, as listed by the U.S. administration
on July 10. Public hearings and comment are now being taken and any new
tariffs would then likely come into force in September.
Asked how more escalating tariffs could
impact supply chains long-term, Cearley said it was too early to tell.
“China has confirmed that they would
be retaliating but they have been far shorter on specifics,” the
“This could take the form of higher
tariffs and trade barriers, which have direct effects on the flows of
cargo, or it could be focused on American companies invested in China,
where the outcomes could be more indirect. We will have to wait and see.
“Overall I don’t see lots of
issues with Transpacific as far as airfreight goes at the moment. I say
that with my fingers crossed. Nobody wants what is going on right now.”
Despite the disruptive nature of the tariffs,
not all of those affected are against the U.S.’ trade strategy in
its entirety. “Many, including the National Retail Federation, seem
to agree, that there are legitimate trade concerns that need to be addressed,”
“The question is whether all sides
will sit down and rationally discuss the issues or continue the ongoing
sabre-rattling. The overarching question is exactly how much price elasticity
exists in the markets affected by the tariffs?” Brandon Fried wondered.
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