Trump’s tariff threats trigger air freight scramble to beat impending deadline
Air cargo rates have surged as companies scramble to beat Donald Trump’s July 9 tariffs deadline.
The cost of transporting goods by plane between south-east and the US has risen by 11pc to $5.17 (£3.79) per kg since early May as companies rush to get products to America before the looming tariffs deadline.
A 90-day pause on Mr Trump’s “liberation day” tariffs is due to expire next week and the president has threatened to impose steep tariffs on countries that do not strike a trade deal before then.
“We’re going to start sending letters out to various countries, starting tomorrow,” Mr Trump told reporters last week, adding that import taxes would “range in value from maybe 60pc or 70pc tariffs to 10pc and 20pc tariffs”.
Air freight is a faster way of transporting goods from Asia to the US. It typically takes just two or three days, compared to between 10 and 15 days when goods are moved by sea.
Shipping is typically more popular because it is far cheaper. However, companies are paying a premium in an effort to move stock to the US before tariffs take effect.
“If the tariffs land tomorrow and say those apply to a huge volume of stock on water, then you’re not protected from the increase in tariffs,” said one industry source. “If you have sent those goods via air freight, you get them there quicker.”
Eytan Buchman, from Freightos, a cargo platform, said there had been “about a 10pc increase in air cargo imports to the United States last week compared to the prior week”.
Companies were taking to the air to “mitigate or minimise the risk of not being able to get products where they need it, when they need it,” he said.
Most goods that are transported by air travel in the belly of passenger planes, rather than on dedicated cargo planes. The higher frequency of passenger planes during the summer months makes it easier for businesses to send more by air as Mr Trump’s deadline looms.
Some airlines that devote a portion of their business to air freight. It makes up a significant part of business for Cathay Pacific, the flag carrier of Hong Kong, given that it runs frequent flights between China and the US.
Last year it made revenues of HK$27.42bn (£2.56bn) from its cargo business, contributing just over 25pc of the group’s annual earnings.
A spokesman said: “The temporary pause in tariff situation has helped stabilise our commercial performance over the past few weeks.”
As new tariffs come into effect “these will hopefully set a new baseline for future demand and remove some of the uncertainty we experienced at the start of the year,” they added.
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