Increased tariffs will spike change for air cargo industry

Increased tariffs will spike change for air cargo industry
Shipping containers wait to be loaded at the airport.
Photo by Jeff Yapalater

The heated political exchanges between President Trump and trading partners over the increased tariffs is resulting in serious concern in the air cargo industry.

According to Brandon Fried, Executive Director of the U.S Airforwarders Association, “As the July 6th tariff imposition deadline nears and importers bringing goods into the US from China, we expect a spike in air cargo volumes as importers race to beat the increased taxes on some of those goods. While air cargo provides faster service and hence more time value, there is a cost difference so companies will need to decide whether paying taxes or the option of higher freight expense works best. The same may happen when the announced tariffs between the US and Europe take effect.

Now is the perfect time for forwarders to meet with their customers to help provide creative options for those seeking a better understanding of how the looming tariffs may affect their upcoming shipments”.

But the metals’ tariffs and further similar measures will potentially unravel the existing global multilateral trade system, vital for a stable and thriving air cargo industry according top industry experts. Alexandre de Juniac’, director general and chief executive of the International Air Transport Association (IATA), has tempered his satisfaction with the airfreight industry’ current growth upswing. “Nobody wins when protectionist measures escalate,” he says in a statement issued by the airline association.

Fried added that the course of action the administration has taken with tariffs could result in some unintended consequences, such as a reduction in demand for air cargo. Although most of the product tariff increases are not typically shipped by air, the chilling effect of protectionism could affect all types of transportation modes. Or the opposite could occur as Fried noted that there is currently a scramble among some shippers and forwarders to move goods before the July 6 deadline – a situation made worse by the recent grounding of 11 Nippon Cargo Airlines freighters due top maintenance issues.

“As the promising new business-friendly tax law takes effect in the U.S., the imposition of tariffs could dampen forecasted explosive growth, and the imposition of the duties may discourage an expected surge in freight volumes,” Fried said.

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