AI-generated
Asia’s air cargo export market is heading into peak season at two markedly different speeds: booming demand for AI-related hardware is supporting the transpacific; while Europe continues to feel the impact of new rules on low-value ecommerce imports.
The scale of the technology boom underpinning the US market is becoming increasingly apparent in Taiwan, where export orders hit a monthly record of $97.94bn in July, surging 61.9% year on year.
Orders from the US jumped 88.9%, to $40.79bn, the largest monthly increase on record, while orders for information and communications technology products rose 89.5%. Taiwan’s Ministry of Economic Affairs said server orders had been stronger than expected, alongside strong demand for cooling products used by the AI supply chain.
Actual exports are following a similar trajectory. Taiwan’s July exports rose 32.9%, to $75.3bn, with electronic components up 50.5% and integrated circuits up 52.3%.
The AI boom is translating directly into airfreight demand. SATS chief executive Kerry Mok told the UK’s Financial Times that the handler was seeing server racks, storage systems, and GPUs being moved by air in a bid to meet time-critical data-centre construction schedules.
Growth in demand from the US has led to something of a striking divergence between the transpacific and Asia-Europe markets.
Combined China and Hong Kong air cargo volumes to the US were up 13% year on year in August, according to WorldACD, while volumes to Europe fell 14%. Hong Kong-Europe was particularly badly hit, with tonnage down 30% year on year and 24% below its June level, before the EU ended its €150 de minimis duty exemption and introduced a €3 charge on low-value imports on 1 July.
The split is also apparent in pricing.
WorldACD said average China/Hong Kong-Europe spot rates fell from around $5.22 per kg in May and June, to $4.34 in August, a decline of around 17%. Their year-on-year premium narrowed from 32% in May and 30% in June, to just 11% in August.
China/Hong Kong-US spot rates also declined from their earlier highs, from $6.59 per kg in June to $5.89 in August, a drop of around 11%, but remained 26% above their level a year earlier.
The latest Freightos Air Index suggests both markets firmed last week, with China-North America rates rising 5%, to $6.30 per kg, and China-North Europe up 6%, to $4.88.
Meanwhile, WorldACD said Hong Kong-Europe volumes rose 3% week on week in week 35 and were 6% above what now appears to have been a low in week 33, indicating a firmer EU market.
TAC Index has also reported signs that Asia-Europe rates began to stabilise in mid-to-late August, following declines through much of July and early August.
Meanwhile, another cost pressure is building out of Asia: fuel.
Cathay Pacific’s long-haul cargo fuel surcharge from Hong Kong fell to HK$6.70 per kg in the second half of July before climbing to HK$10.10 in the first half of August and HK$10.60 in the second half. It has risen again, to HK$11.20, for the first half of September.
The increase comes as jet fuel prices have climbed sharply. TAC Index said average jet fuel prices rose 8.2% during August and were 74.2% higher year on year by 28 August.
Meanwhile, airlines seem to be shoring-up capacity. Indian cargo operator Afcom Holdings is eyeing international expansion with a letter of intent for up to four 777-8Fs, a major step-up for a carrier currently operating 737-800 freighters.
Ethiopian Airlines is also reportedly finalising an order for as many as ten 777 freighters, comprising two current-generation -200Fs and eight -8Fs. The carrier already operates 12 -200Fs and has agreed to lease two converted -300ERSFs from AerCap for delivery in 2028.
More immediate capacity is also beginning to return to the market, with MD-11Fs gradually coming back into service at FedEx and Western Global Airlines, while the first Mammoth Freighters 777-200LRMF conversion has been delivered, set to be operated by DHL.
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