Air Cargo Charters Under Pressure: Cost of the US-China Trade War
Introduction to Trade War
As trade tensions between the United States and China escalate in 2025, the air cargo charter industry navigates turbulent skies. Once a thriving sector fueled by the rapid growth of e-commerce and global trade, it faces significant challenges as tariffs and trade barriers reshape international logistics. This article explores the profound impact of the US-China trade war on air cargo charters, offering a detailed analysis of market trends, industry responses, and prospects for a global audience.
The US-China Trade War: A Brief Overview
The trade war between the US and China, which began in 2018, has seen both nations impose tariffs on billions of dollars’ worth of goods. In 2025, the conflict has intensified, with President Trump proposing tariffs as high as 145% on certain Chinese imports (The New York Times). These measures have disrupted traditional trade routes, affecting not only ocean freight but also the air cargo sector, which relies on efficient transportation of high-value, time-sensitive goods. The trade war’s escalation has led to a reevaluation of global supply chains, with ripple effects felt worldwide.
The air cargo charter industry, essential for transporting urgent and high-value goods, is particularly vulnerable to the trade war’s disruptions. Key impacts include:
Global Trade Diversion: The trade war has prompted companies to diversify supply chains away from China, benefiting countries like Vietnam and India. For example, container shipping rates from Ho Chi Minh City to Los Angeles increased by 24% in early 2025, reflecting a shift in trade routes (CNBC).
E-commerce Disruptions: The imposition of tariffs on low-value e-commerce shipments from China has prompted a significant shift away from air cargo. Major Chinese e-tailers like Shein and Temu, which previously relied heavily on air freight, are now turning to ocean freight and local warehousing. According to FreightWaves, this shift could affect 1.3 million tons of the 2.5 million tons of air cargo imported from China last year, with e-commerce accounting for 20% of global airfreight volume and over 50% of air cargo out of Asia.
Rate Volatility: Air freight rates have experienced significant fluctuations. While spot air cargo rates from China to the US rose by 5% in early April 2025, and rates from Vietnam to the US jumped by 8% (The Guardian), the overall market is bracing for a decline. Analysts predict a potential 30% drop in rates from China to the US, from $5.09/kg to around $3.65/kg, with the possibility of falling below $3.00/kg if demand continues to weaken (FreightWaves).
Capacity Constraints: Geopolitical factors, such as Russian airspace, have reduced flight capacities between China and Europe. Airlines like British Airways, Lufthansa, and KLM have scaled back flights to China, further straining air cargo capacity (Reuters). This has compounded the challenges for air cargo charters, particularly for time-sensitive shipments.
Key Impacts of the US-China Trade War on Air Cargo Charters
| Impact Area | Details | Relevant Numbers |
|---|---|---|
| E-commerce Shift | Chinese e-tailers shifting to ocean freight and US warehousing, reducing air cargo demand. | 1.3M tons of 2.5M tons air cargo impacted; e-commerce is 20% of global airfreight. |
| Rate Changes | 1.3M tons of 2.5M tons of air cargo impacted; e-commerce is 20% of global airfreight. | Rates may fall from $5.09/kg to $3.65/kg; Vietnam-US rates up 8%. |
| Capacity Constraints | Reduced flights to China due to geopolitical issues, straining air cargo capacity. | Expected 30% rate drop from China to the US; some lanes see increases due to rerouting. |
| Trade Diversion | Shift to Vietnam, India as alternatives to China, increasing air freight costs in these regions. | Multiple airlines are cutting China routes. |
Market Research and Analysis
The global air charter services market, which includes air cargo charters, was valued at USD 32.2 billion in 2024 and is projected to grow at a compound annual growth rate (CAGR) of 5.6% from 2025 to 2034, reaching an estimated USD 34.0 billion in 2025 (GMI Insights). Despite this growth, the trade war introduces significant uncertainties. Regionally, the US market was valued at USD 12.2 billion in 2024, while China’s market is expected to exceed USD 3.9 billion by 2034, reflecting its long-term potential despite current challenges.
Market analysts, such as Xeneta, forecast air cargo demand growth of 4-6% in 2025, with capacity increases of 4-5%. However, geopolitical factors and tariffs could limit growth to below 4% (FreightWaves). The trade war’s impact is expected to be most pronounced in the first half of 2025, as businesses rush to front-load imports before new tariffs take effect. E-commerce, a key driver of air cargo, faces headwinds due to stricter US customs regulations, with the US Customs and Border Protection processing over 4 million de minimis shipments daily, potentially dropping to 2-3 million (FreightWaves).
Air Charter Services Market Overview (2024-2034)
| Region | 2024 Market Size | CAGR (2025-2034) | Projected 2034 Size |
|---|---|---|---|
| Global | USD 32.2 billion | 5.6% | – |
| US | USD 12.2 billion | – | – |
| China | – | – | > USD 3.9 billion |
| India | – | 8.3% | – |
| Vietnam | – | – | – |
| UAE | – | 5.0% | – |
Industry Response and Adaptation
The air cargo charter industry is adapting to the trade war’s challenges through several strategies:
- Shift to Ocean Freight: Chinese e-tailers like Temu, Shein, and AliExpress are adjusting their logistics models, shipping frequently ordered products by ocean and distributing them from US warehouses. “Chinese sellers are already adjusting their fulfilment models to ship frequently ordered products by ocean and distribute them from U.S. warehouses,” said Kathy Liu, executive vice president for marketing and sales at Dimerco (FreightWaves).
- Inventory Pre-buying: Businesses are front-loading imports to stock up before potential tariff increases, which could lead to a temporary boost in air cargo volumes in early 2025. This trend is evident in the surge of freight trucking activity at the US-Mexico border (CNBC).
- Diversification to Emerging Markets: Companies are exploring alternative manufacturing and sourcing locations, such as Vietnam and India. For instance, the Cainiao Group launched Xi’an-Liege e-commerce charter flights in September 2024 to boost China-Europe delivery capabilities (GMI Insights).
- Logistics Model Changes: The adoption of a B2B2C model, where inventory is stored in US warehouses to reduce transit times and avoid tariffs, is gaining traction. This shift may decrease the long-term need for air cargo charters.
Global Perspective
The trade war’s effects extend beyond the US and China, influencing global trade dynamics. Europe, for instance, faces the risk of becoming a dumping ground for surplus Chinese production if it does not strengthen its trade barriers (The Guardian). Meanwhile, countries like Vietnam and India are benefiting from trade diversion, with increased air freight activity reflecting their growing roles in global supply chains. The global B2B e-commerce market is expected to reach USD 36 trillion by 2026, and B2C e-commerce is projected to hit USD 5.5 trillion by 2027, driving demand for air cargo charters in these emerging markets (GMI Insights).
Future Outlook
The future of the air cargo charter industry remains uncertain as long as trade tensions persist. Short-term opportunities may arise from supply chain disruptions, such as increased air cargo demand due to ocean freight delays or pre-buying of inventory. However, the long-term outlook suggests a more challenging environment, with reduced demand from key markets like China and ongoing capacity constraints. The industry’s resilience and ability to innovate will be critical. As global trade dynamics shift, air cargo charters may find new opportunities in emerging markets and evolving consumer behaviours, such as the growing demand for faster delivery in e-commerce.
Conclusion
The US-China trade war has cast a significant shadow over the air cargo charter industry, prompting a reevaluation of strategies and operations. From e-commerce disruptions to rate volatility and capacity constraints, the challenges are multifaceted. Yet, the industry’s adaptability—through diversification, logistics adjustments, and exploration of new markets—offers hope for navigating these turbulent times. As stakeholders look to 2025 and beyond, leveraging data-driven insights and flexible business models will be essential to remain competitive in a rapidly changing global trade landscape.
Safe Fly Aviation: Your Partner in Cargo Solutions
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