The air cargo market is in flux, and U.S. shippers are feeling the turbulence. Spot air freight rates from Shanghai to the U.S. dropped a staggering 29% in February compared to January, driven by a post-Lunar New Year slowdown and growing uncertainty over U.S. regulatory changes targeting low-value “de minimis” imports. As the market adjusts to these shifts, the ripple effects are reshaping supply chains, e-commerce strategies, and shipping costs—presenting both challenges and opportunities for your business.
At Gain Consulting, we’re here to help you make sense of this evolving landscape. Here’s a deep dive into what’s happening, why it matters, and how you can position your operations for success in 2025 and beyond.
A Perfect Storm: Post-Holiday Slump Meets Regulatory Uncertainty
Air freight rates from China to the U.S. have taken a nosedive since the Lunar New Year, a period that traditionally sees a lull in shipping activity. But this year, the decline was steeper and more sustained than usual. According to Niall van de Wouw, Chief Air Freight Officer at Xeneta, average spot rates out of Shanghai fell 29% month-over-month in February—a drop that has since moderated but still signals a significant market correction.
What’s driving this? A major factor is the U.S. government’s clampdown on the de minimis exemption, which allows shipments valued under $800 to enter the country duty-free (one per shipper, per consignee, per day). In 2024, China accounted for two-thirds of the 1.36 billion de minimis imports into the U.S., fueled by booming e-commerce demand. That demand kept air freight capacity tight and rates elevated throughout last year, effectively locking the industry in “peak season mode.”
But the Trump administration’s February decision to remove low-value products from de minimis eligibility threw a wrench into the system. The immediate result? Chaos. As Alan Beacham, Managing Director of Toll Group, recounted at the Journal of Commerce’s TPM25 conference in Long Beach, “a million and a half parcels were on the ground in Chicago and five to seven million parcels across the U.S.” within just three days. The backlog forced regulators to reinstate the exemption temporarily until a workable inspection and duty collection system can be implemented.
This regulatory rollercoaster has left shippers and carriers scrambling. “From the conversations we are hearing, some shippers are clearly looking for ways to minimize the impact of U.S. tariffs, while others will be anticipating lower air freight rates if e-commerce volumes show a sustained dip,” van de Wouw noted in Xeneta’s latest update. The uncertainty is palpable—and it’s reshaping the air cargo market in real time.
E-Commerce Disruption: From Air to Ocean
The de minimis crackdown isn’t just a short-term headache; it’s prompting a structural shift in how goods move. Kathy Liu, Vice President of Global Sales and Marketing at Dimerco Express Group, observed that the air cargo market slowed significantly after January 20, when the policy changes were announced. “This led to e-commerce platforms canceling charters, disrupting the supply and demand balance,” she wrote in a March update.
E-commerce isn’t going away—far from it. But Liu predicts a pivot from the rapid, air-reliant business-to-consumer (B2C) model to a more traditional fulfillment approach. What does that mean for shippers? More cargo is shifting from air to ocean freight, a slower but cheaper alternative. This transition could ease pressure on air capacity in the near term, but it also raises questions about lead times, inventory management, and cost structures for businesses accustomed to the speed of air transport.
The Numbers: A Mixed Outlook for 2025
Last year was a banner year for air freight, with global volumes surging 12% in 2024, according to Xeneta. For 2025, the forecast is more modest—growth of 4% to 6%—but trade tensions and regulatory uncertainty have cast a “big question mark” over that projection, as van de Wouw put it. “This is a situation completely outside of the control of the air cargo market, and there’s a great deal of noise, which is adding to stakeholders’ anxiety,” he said.
Meanwhile, Cargo Facts, an air cargo consultancy, warns of longer-term challenges. While a dip in de minimis-driven demand might temporarily alleviate capacity constraints, structural issues—like aging aircraft fleets, delays in freighter conversions, and slow production of new planes—could keep the market tight. “The near-term future of air cargo remains uncertain, with shifting trade policies and supply chain challenges shaping the industry,” Cargo Facts wrote in its latest Baltic Air Index outlook.
What This Means for U.S. Shippers
For U.S. shippers, the current market dynamics are a double-edged sword. Here’s how these changes could impact your operations:
Lower Air Freight Costs—For Now
The 29% drop in spot rates from Shanghai to the U.S. is a welcome relief after last year’s high-rate environment. If e-commerce volumes soften further, you could see continued downward pressure on prices—offering a chance to optimize shipping budgets.
Supply Chain Realignment
As e-commerce shifts toward ocean freight, you may need to rethink your logistics strategy. Longer transit times could require adjustments to inventory levels, safety stock, and customer expectations.
Regulatory Risks
The de minimis saga is far from over. A permanent policy change—whether stricter inspections, new duties, or a lower threshold—could disrupt your cost models and sourcing strategies, especially if you rely heavily on low-value imports from China.
Capacity Uncertainty
While air capacity may loosen in the short term, long-term supply constraints could drive rates back up. Planning for volatility will be critical.
Navigating the Chaos with Gain Consulting
At Gain Consulting, we understand that uncertainty can feel overwhelming—but it’s also an opportunity. The air cargo market’s upheaval, paired with the de minimis clampdown, is a chance to reassess your supply chain, cut costs, and build resilience. Our team is ready to help you turn these challenges into a competitive edge.
Here’s how we can support you:
Rate Analysis: We’ll benchmark your current air freight costs against market trends, identifying savings opportunities as rates fluctuate.
Mode Optimization: Whether it’s shifting to ocean freight or fine-tuning your air strategy, we’ll model the trade-offs to find the right balance for your business.
Regulatory Preparedness: We’ll help you anticipate and adapt to de minimis changes, ensuring compliance while minimizing cost impacts.
Capacity Planning: From securing space to mitigating future shortages, we’ll keep your goods moving no matter the market conditions.
The air cargo landscape is shifting fast, and the stakes are high. Let Gain Consulting be your partner in navigating this new reality.
Looking Ahead: Uncertainty as the New Normal
The air cargo market isn’t out of the woods yet. As Beacham warned at TPM25, “E-commerce will continue to grow, and the complexity around the intersection with tariffs and customs is creating uncertainty as to how that will play out.” With no clear “end game” in sight, as van de Wouw noted, shippers must brace for ongoing volatility—both in rates and regulations.
But with volatility comes opportunity. Lower air freight rates could free up capital for other priorities. A shift to ocean freight could streamline costs for non-urgent shipments. And proactive planning could position you ahead of competitors still reacting to the chaos.
At Gain Consulting, we’re committed to keeping you informed and empowered. The de minimis debate and its fallout are still unfolding, and we’ll be tracking every development. Contact us today to explore how these changes affect your business—and how we can help you thrive in this uncertain environment.
Stay ahead of the curve with Gain Consulting—your trusted guide in a shifting shipping world.
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