AI Hardware Demand Splits Asian Air Cargo Export Market
The Asian air cargo export market is entering peak season divided, with strong AI-related demand boosting transpacific volumes while new EU e-commerce
Asia's air cargo export market is moving into its peak season at two different speeds. Surging demand for artificial intelligence hardware is propping up the transpacific lane, while shipments to Europe are suffering from new import regulations.
Taiwan's export orders hit a monthly record of $97.94 billion in July, a year-on-year surge of 61.9%. Orders from the United States jumped 88.9% to $40.79 billion, the largest monthly increase on record. Taiwan’s Ministry of Economic Affairs said server orders had been stronger than expected, alongside strong demand for cooling products used by the AI supply chain.
Diverging Trade Lanes
This demand is creating a stark split between the transpacific and Asia-Europe air cargo markets. Combined China and Hong Kong air cargo volumes to the US rose 13% year-on-year in August, according to WorldACD data. Volumes to Europe fell 14% over the same period. Hong Kong-Europe traffic was hit particularly hard, with tonnage down 30% year-on-year and 24% below its June level. This decline followed the European Union's July 1 removal of its €150 de minimis duty exemption and the introduction of a €3 charge on low-value imports.
The divergence is clear in pricing. Average spot rates from China and Hong Kong to Europe fell from around $5.22 per kilogram in May and June to $4.34 in August, a drop of roughly 17%. Their year-on-year premium narrowed from 32% in May to just 11% in August.
| Route | June Rate ($/kg) | August Rate ($/kg) | Change | Year-on-Year Premium (Aug) |
|---|---|---|---|---|
| China/Hong Kong to Europe | 5.22 | 4.34 | -17% | +11% |
| China/Hong Kong to US | 6.59 | 5.89 | -11% | +26% |
Rates to the US also declined from earlier highs but remained significantly stronger than last year. The latest Freightos Air Index suggests both markets firmed last week, with China-North America rates rising 5% to $6.30 per kg and China-North Europe up 6% to $4.88.
AI Boom Fuels Airfreight
The technology boom is directly translating into air cargo demand. Kerry Mok, chief executive of handler SATS, told the Financial Times that the company was seeing server racks, storage systems, and GPUs being moved by air to meet time-critical data-centre construction schedules. Actual Taiwanese exports followed the order trend, with July exports rising 32.9% to $75.3 billion. Electronic component exports were up 50.5%, with integrated circuits up 52.3%.
Capacity and Cost Pressures
Airlines appear to be preparing for sustained demand by shoring up capacity. Indian cargo operator Afcom Holdings is eyeing international expansion with a letter of intent for up to four 777-8F freighters. Ethiopian Airlines is reportedly finalising an order for as many as ten 777 freighters, comprising two current-generation -200Fs and eight -8Fs. More immediate capacity is also returning, with MD-11Fs gradually coming back into service at FedEx and Western Global Airlines.
Meanwhile, another cost pressure is building. Cathay Pacific’s long-haul cargo fuel surcharge from Hong Kong has climbed steadily, reaching HK$11.20 per kilogram for the first half of September. This increase tracks a sharp rise in jet fuel prices; TAC Index reported average prices rose 8.2% during August and were 74.2% higher year-on-year by August 28. The first Mammoth Freighters 777-200LRMF conversion has been delivered and is set to be operated by DHL.
