Air freight rates soar as US July 9 tariff deadline looms

Air Freight (Photo: Freepik)

Air freight rates have skyrocketed as companies race to meet Donald Trump's July 9 tariff deadline.

The cost of air freight between Southeast Asia and the US has risen 11% to $5.17 per kilogram since early May, as companies rush to get products to the US before the deadline approaches.

A 90-day pause on Trump's "liberation day" tariffs expires next week, and the president has threatened to impose steep tariffs on countries that fail to reach a trade deal by then.

“We’re going to start sending letters out to various countries, starting tomorrow,” Trump told reporters last week, adding that the tariffs would “range in value from maybe 60pc or 70pc tariffs to 10pc and 20pc tariffs.”

Air freight is a faster way to move goods from Asia to the United States. It typically takes just two to three days, compared to about 10 to 15 days when goods are shipped by sea.

Sea freight is more popular because it’s much cheaper. But companies are paying higher prices to ship goods to the United States before the 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.”

“About a 10pc increase in air cargo imports to the United States last week compared to the prior week” said Eytan Buchman, of freight platform Freightos.

Companies are turning to air freight to “mitigate or minimise the risk of not being able to get products where they need it, when they need it.”

Most air freight is carried in the belly holds of passenger planes, rather than on dedicated cargo planes. Higher passenger flight frequencies in the summer months make it easier for businesses to send more air freight as the US deadline approaches.

Some airlines devote a portion of their business to air freight. It is a key business for Cathay Pacific, Hong Kong’s flag carrier, which operates regular flights between China and the US.

Last year, the firm generated HK$27.42bn (£2.56bn) in revenue from its commodities business, which contributed more than 25% of the group’s annual profit.

A spokesperson said: “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 that, as the new tariffs come into effect, “we hope these will establish a new baseline for future demand and remove some of the uncertainty we experienced earlier in the year.”

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Source: Phaata.com (According to The Telegraph)

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