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Uncertainty grows as US tariffs target China

Feb 5, 2025 | , , , , , , , , , , , , , ,

While last-minute negotiations resulted in a temporary reprieve for Canadian and Mexican imports, President Trump’s new tariffs on Chinese goods from the 4th February have already triggered retaliation, adding further pressure to international supply chains.

US tariffs on Canadian and Mexican imports have been put on hold for at least 30 days following security commitments from both nations. This delay offers temporary relief for critical trade lanes, including automotive components, electronics, and pharmaceuticals.

Canada has pledged increased border enforcement measures, including new personnel and surveillance technology, while Mexico has committed to deploying additional forces to its border. These actions have led to a pause in tariffs, but shippers should remain cautious as negotiations continue, with the risk of duties being reinstated if agreements are not finalised by March.

The US administration has implemented an additional 10% tariff on Chinese imports and in response China has introduced tariffs of up to 15% on selected US goods and imposed export controls, affecting critical technologies such as solar cell production. While these measures appear targeted, they contribute to an increasingly volatile trade environment, forcing businesses to reconsider sourcing strategies and logistics solutions.

US prepares further trade restrictions

Beyond tariffs, the US is tightening its stance on eCommerce imports by getting ready to suspend the de minimis exemption for shipments from China, as soon as adequate systems are in place to fully and expediently process and collect tariff revenue. Previously, goods valued under $800 could enter the US duty-free, but the removal of this exemption would be expected to severely impact cross-border eCommerce air cargo volumes.

In addition, new regulations, announced by US Customs and Border Protection, introduce additional filing requirements, increasing administrative burdens on online retailers and logistics providers. However, analysts suggest that while higher costs may impact some importers, consumer demand is unlikely to diminish significantly, given the relatively low average value of eCommerce purchases.

With ongoing negotiations between the US, Canada, and Mexico, and China’s measured response to tariffs, industry leaders remain cautiously optimistic. However, agility will be essential in navigating evolving trade policies and regulatory changes. As new agreements are brokered and tensions shift, shippers must remain adaptable to mitigate risks and capitalise on emerging opportunities.

As global trade policies shift and new tariffs reshape supply chains, proactive planning is more critical than ever. At Metro, we leverage award-winning services and deep industry expertise to help businesses navigate evolving trade barriers, regulatory changes, and supply chain disruptions.

Whether you need to mitigate the impact of tariffs, ensure compliance with new regulations, or adapt sourcing/export strategies, our tailored solutions keep your supply chain resilient and competitive.

EMAIL Andy Smith, Managing Director, today to explore how Metro can safeguard your supply chain and support your business in 2025 and beyond.

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Air cargo demand defies regulatory uncertainty

Feb 5, 2025 | , , , , , , , , , , , ,

In the final week of January, just before Lunar New Year, air freight spot rates continued their upward trend, rising 4% WoW and remaining 11% higher than 2024, supported by strong demand and tight capacity.

Market conditions remained resilient, with Asia-Pacific leading the growth as businesses rushed shipments before factory closures. While tonnages and spot rates have risen steadily in recent weeks (2% and 6%), comparisons to previous years are complicated by the earlier timing of Lunar New Year in 2025.

Asia Pacific to Europe volumes rebounded for a third consecutive week, approaching levels seen in mid-December. Similarly, demand on the transpacific route increased after a seasonal decline, with volumes and rates gradually strengthening. Despite some fluctuations, the market remains significantly stronger than last year, with rates holding firm and demand outpacing 2024 levels.

Regulatory headwinds create uncertainty

Despite a strong start to the year, regulatory developments in the US are introducing new challenges for air cargo. The shift toward protectionist policies has created uncertainty, particularly following the recent trade dispute with Colombia, where tariff threats were used as a negotiation tool. This approach signals a departure from predictable, rule-based trade agreements, raising concerns over future disruptions.

Uncertainty also surrounds changes to US de-minimis rules, which previously allowed low-value imports under $800 to enter tax-free. The exemption for Chinese goods has been suspended, a move expected to disrupt eCommerce shipments that have fuelled air cargo growth. Additionally, new filing requirements proposed by US Customs and Border Protection (CBP) would impose additional administrative burdens on cross-border eCommerce, impacting the more than 1.4 billion packages expected to enter the US this year.

Despite these concerns, industry experts believe the impact on consumer behaviour may be minimal, as the average value of eCommerce purchases is relatively low, suggesting that elevated eCommerce volumes may continue. While increased taxation could affect logistics costs, major policy shifts would require legislative approval, making immediate changes unlikely.

Outlook

While demand is still slightly below December’s peak, it has surpassed October levels, suggesting continued resilience. Over the past five weeks, available cargo capacity has increased across all major regions, with Europe and North America experiencing the most significant growth. Chargeable weight trends varied by region, with notable year-on-year increases in Asia Pacific and Africa, while other regions remained relatively stable.

Industry leaders emphasise the need for agility in navigating shifting trade policies, drawing parallels to the Year of the Snake, which symbolises adaptability. While challenges remain, the consensus is that air cargo demand will remain strong into 2025, with the market well-positioned to weather logistical and regulatory changes.

Metro’s airfreight, charter, and sea/air solutions strike the perfect balance of speed, cost-efficiency and resilience for time-sensitive, urgent and high-value shipments.

With block space agreements (BSA) and capacity purchase agreements (CPA) in place, we secure priority access to space and competitive rates on the busiest trade lanes. 

Whatever you’re shipping, our expertise and strategic carrier partnerships keep your cargo moving—on time and within budget.

Stay ahead in a volatile market. EMAIL Elliot Carlile, Operations Director, today to explore how Metro can support your business.

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Asia–Europe airfreight: Growth and vulnerabilities

Jan 23, 2025 | , , , , , , , , , , ,

Despite growth and robust demand airfreight faces significant challenges, including reliance on eCommerce, capacity pressures, and geopolitical disruptions.

Airfreight demand on the Asia–Europe route saw a strong performance in 2024, bolstered by eCommerce, automotive parts, pharmaceuticals, garments and high-value electronics. Despite a slowdown in Europe’s domestic electric vehicle (EV) market, manufacturers have maintained steady shipments of EV-related spare parts to ensure regional stock levels. Meanwhile, high-value and time-sensitive automotive components remain key drivers of growth.

Pharmaceuticals and perishable goods have seen consistent demand on routes from Europe to Asia, with semi-conductor equipment and machinery playing a significant role. Electronics, one of the region’s most valuable cargo types, continues to move in high volumes, reflecting growing technological and consumer demands across Europe and Asia.

eCommerce slowdown exposes dependency

Despite surging demand for general cargo like electronics, automobile parts and garments out of India, Vietnam and Thailand, the airfreight sector’s strong reliance on eCommerce has been a double-edged sword. While the pandemic initially spurred a boom in eCommerce shipments, recent months have seen a sharp decline, with eCommerce volumes dropping significantly since the start of the year,, particularly from China.

Retailers’ full inventories and softer consumer demand have exacerbated this trend, leaving carriers grappling with reduced activity levels. While other verticals, such as pharmaceuticals and automotive, remain stable, the gap left by diminishing eCommerce volumes presents an ongoing challenge.

Capacity challenges and geopolitical pressures

Capacity remains a key issue on the Asia–Europe route. Airlines have deployed additional resources, including charter flights, to manage peak-season bottlenecks. However, this has come at a premium, with carriers competing for limited space amid strong demand for specific commodities.

Geopolitical factors have further complicated operations. The closure of Russian airspace forced carriers to reroute flights, leading to longer journey times, higher fuel consumption, and increased costs. European carriers also face competition from new Chinese entrants and Middle Eastern airlines have added another layer of complexity. This competition, while offering more options, has compressed margins for traditional carriers.

Balancing resilience with adaptation

Looking ahead, the Asia–Europe airfreight trade lane must strike a balance between resilience and adaptation. While commodities such as automotive parts, pharmaceuticals, garments and high-tech goods provide a stable foundation, diversification across more verticals will reduce vulnerabilities.

Capacity pressures and geopolitical disruptions will require innovative solutions, from optimising routes to strengthening partnerships with supply chain stakeholders.

Metro is here to help you navigate these complexities with tailored solutions that ensure reliability, cost-efficiency, and resilience.

Our airfreight, charter, and sea/air services are designed to handle urgent and sensitive shipments with precision. By leveraging block space agreements (BSA) and capacity purchase agreements (CPA), we lock-in space and competitive rates on the busiest trade lanes.

Whatever you’re shipping, Metro’s expertise and strategic carrier partnerships can optimise your supply chain while saving you money.

EMAIL Elliot Carlile, Operations Director, today to explore how Metro’s solutions can support your business on the Asia–Europe trade lane and beyond.

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Freight market outlook 2025: Navigating uncertainty and change

Jan 8, 2025 | , , , , , , , , , , , , , , , ,

The freight industry faces a challenging 2025, with ongoing diversions around Africa, potential labour strikes, and looming tariff changes shaping the air and sea freight landscape. 

While best and worst-case scenarios could unfold, the most likely outcome lies somewhere in between, creating a complex and dynamic environment for shippers and carriers alike.

Red sea disruptions and capacity adjustments

Persistent attacks in the Red Sea continue to divert container traffic via the Cape of Good Hope, extending transit times and keeping freight rates elevated. Even if hostilities end, a lengthy adjustment period is likely as shipping lines reintroduce Red Sea routes.

With carriers set to phase in new networks in February and March, further changes to accommodate Suez transits may not occur before August. This transitional phase could temporarily worsen congestion and delays. However, once stabilised, the market would benefit from restored transit times and reduced rates.

The reintroduction of capacity also raises concerns about overcapacity. Carriers are actively working to mitigate this risk through measures like scrapping older vessels, reducing charter fleets, slow steaming, and blank sailings. While these steps may stabilise rates, their effectiveness will depend on demand levels throughout the year.

Labour strikes and tariff impacts

Despite agreement on outstanding issues on the 8th January, the threat of strikes at US East and Gulf coast ports has not entirely lifted. And while they are theoretically unlikely, they could remain a possibility until Summer 2025.

Tariffs, on the other hand, remain a critical factor. New US tariffs in 2025, particularly on Chinese imports and goods from Canada and Mexico, could drastically reshape trade flows. Anticipation of these tariffs has already led to front-loading, as shippers move goods early to avoid higher costs. This behaviour may disrupt seasonality, creating spikes in demand and rates before tariffs take effect, followed by lower volumes afterwards. Additionally, tariffs could encourage sourcing shifts to countries like Vietnam and India, further altering global trade dynamics.

Air freight under pressure

Air freight, driven by strong eCommerce demand from Asia, enjoyed robust growth in 2024, but 2025 presents significant headwinds. Potential changes to the US ‘de minimis’ thresholds could curb eCommerce shipments, while Trump’s proposed tariffs may disrupt transpacific flows further.

Capacity constraints, already a challenge, could ease slightly if eCommerce demand slows. This would benefit transatlantic shippers, who saw air cargo spot rates from Western Europe to the US double during the 2024 peak season. However, other pressures loom, including the EU’s ReFuelEU Sustainable Aviation Fuel (SAF) mandate, which took effect on 1st January 2025, requiring a minimum of 2% SAF at EU airports—raising airline costs.

A year of uncertainty

2025 will be a year of adjustment for the freight industry as carriers and shippers navigate geopolitical risks, evolving capacity challenges, and shifting trade policies.

In addition weather related issues as a result of global warming and other environmental impact need to be considered during certain months and seasons. Hurricanes, typhoons, flooding, fires, volcanic occurrences could all have an impact in certain regions at different times.

Shippers must prepare for fluctuating demand and rates, anticipate potential disruptions, and stay informed. Flexibility and proactive planning will be key to navigating the complexities of 2025 and ensuring long-term success.

For urgent and sensitive shipments, Metro offers tailored airfreight, charter, and sea/air solutions. With block space agreements (BSA) and capacity purchase agreements (CPA), to guarantee space and competitive rates on the busiest routes.

In a volatile sea freight market, our fixed-rate agreements on popular shipping routes reduce risk and provide essential budgetary certainty. 

To explore how Metro’s carrier agreements could optimise your supply chains and save you money in 2025, please EMAIL our Managing Director Andy Smith.

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