Demand Declines Amid Trade Changes

Cathay Cargo has recently reported a noticeable drop in air cargo demand from Hong Kong and mainland China during May, attributed to shifts in tariffs and de minimis regulations. However, the airline is finding solace in an increase of cargo volumes stemming from other regions.

Shifts in Cargo Patterns

In a candid update shared in the company's monthly performance summary, Cathay's chief customer and commercial officer, Lavinia Lau, noted that despite the challenges, steady replacement cargo from Southeast Asia has emerged, helping to bridge the demand gap. "In May, we have seen consistent support from other areas of our network," Lau stated, emphasizing the company’s commitment to closely monitor market developments.

Impact of Tariff Changes

According to WorldACD data, airfreight volumes from China and Hong Kong to the US have taken a hit since the termination of the de minimis exemption that previously applied to Chinese e-commerce packages. Although the US and China have momentarily paused their trade war, slashing tariffs from a staggering 145% down to 30%, concerns linger.

Packages moving through postal networks now face a hefty 54% tariff or a flat fee of $100, while non-postal e-commerce shipments are charged at 30%.

Strategic Adjustments Ahead?

Lau conveyed a sense of cautious optimism: "The latest tariff announcements bring some reassurance to our market prospects in the near term," she remarked, hinting at potential adjustments in freighter capacity depending on evolving demand patterns.

April Performance and Future Outlook

While the full ramifications of the trade disruptions on May's cargo volumes remain unclear, Cathay enjoyed a remarkable year-on-year increase of 13.6% in air cargo volumes for April. The airline has also seen a growing demand for its specialized solutions.

Available Freight Tonne Kilometers (AFTKs) rose by 8.9%, though the load factor dipped slightly by 1.1 percentage points compared to last year.

In the first four months of 2025, total tonnage surged by 12.4% compared to the same period in 2024. Lau explained that the tonnage in April was down 10.4% from March, mainly due to the traditional end-of-quarter surge in March and multiple holiday breaks in April.

Specialist Solutions on the Rise

Nonetheless, Cathay's specialized solutions, particularly the Cathay Priority service for the Asia Pacific to US trade route, are thriving ahead of the tariff implementations. Furthermore, demand for the Cathay Expert solution is also on the rise, driven by robust exports of semiconductor machinery from North Asia and sporadic demand from Europe to Hong Kong.

Cathay’s impressive 13.6% growth in air cargo volumes for April significantly outpaces the overall global volume growth of just 4%, as reported by Xeneta.