Air cargo faces $22B revenue hit when China tariff exemption ends

U.S. plans next month to cancel tariff-free access for low-value parcel shipments from China and Hong Kong, coupled with a new 145% tariff rate on Chinese imports, could bleed more than $22 billion in revenue from the air cargo sector over three years and put thousands of online sellers with direct-to-consumer fulfillment models out of business, according to an e-commerce and logistics consulting firm. 

Derek Lossing, the founder of Cirrus Global Advisors, has previously said the Trump administration’s recent trade actions against China would “decimate” air cargo out of China because demand for products on the Temu and Shein platforms would plummet. His Seattle-based consultancy has now quantified the downstream effects of the changes on the air cargo sector. 

The Cirrus Global Advisors model shows the airfreight industry revenue could contract $22 billion if the White House maintains tariffs at 125% for a substantial period of time, based on assumptions about lower consumer demand, excess airline capacity and downward pressure on yields. Large cargo airlines and freighter forwarders, like Atlas Air and Kuehne+Nagel subsidiary Apex Logistics, with heavy exposure to large Chinese marketplaces, as well as Amazon and smaller online brands, are expected to experience downward pressure on revenues, Lossing said in a phone interview.

The estimate was made before the U.S. clarified that China tariff rate was actually 145%, to include a previous tariff, but it’s unclear if the higher rate would further drag down industry revenue.

E-commerce shipments account for an estimated 50% to 60% of China-U.S. air volumes and an estimated 20% of global air cargo volumes, according to logistics providers and the International Air Transport Association. Experts agree that dozens of widebody freighters are dedicated to hauling e-commerce shipments across the Pacific each day from China, but Lossing said he believes an estimate of 100 such aircraft by Netherlands-based consultant Rotate is high.