Vietnam’s rapid rise reshapes the air cargo market to the US

Figure of the week

$110 million

New US cargo security rules will cost air freight shippers more than $110 million yearly due to added compliance requirements. The US is expanding its Air Cargo Advanced Screening (ACAS) requirements to include a far broader range of data. CBP has said it will show restraint in enforcement over the first 12 months once the rules are in force — due earlier this week.

Quote of the week

“I don’t think we should leave anybody with the illusion this is going to be confined to Asia–Europe, since it’s a port congestion problem. It’s every trade in and out of Europe. We should also keep in mind that this is to some degree going to impact the US East Coast as well.” Hapag-Lloyd CEO Rolf Habben Jansen warns of widespread port congestion when Suez transits return.

Demand uncertainty hinders shippers’ planning

Importers hoping for supply chain reliability after a year of uncertainty are likely to be disappointed as the deepening slowdown in ocean shipping to the US creates new market shifts . Uncertain consumer sentiment as well as the potential for more tariff changes are making it difficult for shippers to predict market developments. Ben Hackett, founder of Hackett Associates, said that months of front loading, as well as uncertain demand and the potential for more tariffs, was keeping retail inventories running lean. “These conditions make market forecasting highly uncertain,” said Hackett. “Our trade outlook is for a small decline in imports this year compared with 2024 and a further larger decline in the first quarter of 2026.” US manufacturing activity is growing, but at the same time consumer prices are rising and job gains are slowing. There is a potential for an even greater slowdown in consumer demand if importers start to believe they need to pass on the impacts of tariffs onto consumers. Michael Zdinak, US consumer market services lead at S&P Global, described the slump in retail growth as an untimely reminder of consumers’ precarious position. “They have managed to continue spending despite the ebb and flow of prices in recent years, but each time, their steps have been more measured,” he said. Major retailers such as Home Depot have begun to express concerns over affordability and jobs and living costs. An absence of federal data following the government shutdown (see story below) is making supply chain forecasting even harder. The silver lining in the cloud for shippers is that rates are continuing to fall. Potential capacity constraints, such as those outlined below, are unlikely to have a major impact .

Black Friday underlines air freight market shifts

The customary Black Friday demand surge in air freight demand has underlined a new trend - the growth in Vietnam-to-US shipments . Demand was particularly high on Vietnam–US routes in the run-up to Black Friday. E-commerce volumes and high-tech shipments combined to squeeze freighter capacity. While Black Friday represents an anomaly in the final two months of the year, analysts said that the growth of shipments from Vietnam reflected how importers are diversifying supply chains away from China. Chinese e-commerce shipments have fallen away following the scrapping of the de minimis exemption - though there are signs that some volumes are returning. On the Vietnam-US route, industry insiders expect demand driven primarily by high-tech electronics and semiconductors to continue. Volumes from Thailand are also growing despite the breakdown in bilateral trade talks between Bangkok and Washington. The talks stalled amid pressure from the US for a permanent resolution to the Thai–Cambodia border dispute. However, Thai shippers see another cloud on the horizon of Thai–US relations. They are worried about trade figures that show a 28% growth in exports from Thailand to the US during the first three quarters of 2025. On the surface, this would look like good news. But Thai shippers’ groups have warned that the figures are misleading. They believe much of the volumes are accounted for by trans-shipment, essentially routing goods from other countries through Thailand to avoid US tariffs. What’s more, they are worried that the US will soon start to enforce strict enforcement of customs rules on trans-shipments, leading to an abrupt drop in volumes. Meanwhile, even after Black Friday, capacity continued to be tight on Asia-US air freight routes. This is largely due to airlines rerouting capacity towards the now more lucrative Asia–Europe market. The big question for shippers now is how much Christmas stockpiling is likely to take place in the coming weeks. As a result, air freight shippers should be alert to possible rate increases and even tighter capacity.

Asia-Europe growth sucks up box capacity

At a time when ocean carriers’ traditional weapons to shore up rates — blanking, scrapping vessels, slow steaming — have had little effect, a new factor is coming to their rescue . Growing demand for China to Europe shipments is soaking up excess capacity worldwide and exerting upward pressure on admittedly slack Trans Pacific rates. “The momentum out of China is strong,” said Maersk CEO Vincent Clerc during an earnings call. “The consequence for us is not only the resilience of demand growth, which will continue absorbing some of the new capacity coming online, but also the increased trade imbalance that it is causing, which, over time, will lead to higher production costs and lower asset intensity for the industry.” Growing overcapacity has been one of the major factors in falling rates over recent months. BIMCO has predicted that global container capacity will rise 7.3% by the end of this year compared to 2024. Clerc said the result of growing Chinese container trade meant overcapacity was “not increasing as brutally as one would suspect”. However, carriers could soon face a new challenge in growing pressure to return to Red Sea routings in the face of the Houthi ceasefire in the region. This would make it even harder for them to prop up rates, Sea-Intelligence CEO Alan Murphy underlined just how much diversions away from the Red Sea had soaked up extra capacity. Next year, there is no guarantee for carriers that China will continue to soak up tonnage and port capacity, he said. In that case, the industry may be forced to fall back on idling, slow steaming and especially scrapping. Just eight vessels have been scrapped so far in 2025, according to BIMCO. For shippers, then, they may be feeling the indirect effects of growing China to Europe demand. But there is every sign that this will not lead to rates hardening in coming months .

🤔 Did you know ?

A new source of supply chain disruption has emerged from the US federal government shutdown: a lack of data to inform purchasing decisions. Port of Los Angeles director Gene Seroka said a gap in federal data meant importers had less insight to make planning decisions around Lunar New Year orders. Seroka said retailers typically have a three-month window to enter orders prior to the Lunar New Year holiday, which starts on February 17.

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