All eyes now on US Presidential elections: Dimerco

The U.S. Presidential elections on November 5, 2024 could have significant implications for global trade and supply chains. Political outcomes may lead to shifts in trade policies and regulations, raising concerns about a potential 200 percent tariff increase on Chinese goods, says the latest Asia Pacific freight report from Dimerco.

"If these fears persist, businesses might rush to finalise shipments before the January 20, 2025 inauguration or experience delays until new tariffs are announced. Stakeholders must stay vigilant and adaptable in this uncertain climate."

Indonesia welcomed its eighth President, Prabowo Subianto, on October 20, 2024, and Subianto has "pledged to enhance the nation's self-sufficiency, aiming to boost economic growth from the current five percent to eight percent by focusing on developing industries that capitalise on natural resources.” The President will also welcome foreign investment, potentially offering opportunities for investors to manage airports and seaports, as part of his strategy to drive economic development, the report added.

Weak economic indicators
The Global Manufacturing PMI dropped from 49.5 to 48.8 in September. "For the first time this year, the index dipped below the same month’s levels from last year, signalling a more pronounced slowdown in global manufacturing activity."

India reported a reading of 56.5, down from 57.5 in September 2023 but the highest among regions tracked, the report added.

Projections indicate that global economic growth for FY 2024 will likely be around 2.5 percent, below the pre-pandemic average GDP growth of 3.1 percent over the previous decade.

Air cargo peak season is on
The traditional peak season has begun in mid-October, immediately following China's Golden Week holiday," says Kathy Liu, VP, Global Sales and Marketing, Dimerco Express Group. "Alongside e-commerce growth, the launch of new electronic goods and products has driven prices upward. Capacity within intra-Asia routes is currently extremely limited as airlines allocate a greater portion of first-leg allotments to long-haul shipments due to higher revenue potential. November is anticipated to be the peak month of 2024, particularly for shipments destined for the U.S. and Europe."

Country report
Taiwan: Demand for e-commerce goods has decreased but artificial intelligence and high-speed computing industries continue to drive exports.

"For shipments to the U.S., carriers are offering more room for negotiation on large-volume shipments as space improves. In contrast, shipments to India remain tight with full bookings expected to continue into

November. Urgent shipments to Chennai, Delhi and Mumbai will incur higher rates."

China: After the Golden Week holiday, airfreight demand has risen, leading to increased rates for shipments to Europe and the U.S. from North and South China, the update added.

"There is a space backlog from Tianjin to Europe and the U.S. It’s advisable to book at least a week in advance to secure your shipment. From October 13 to December, Asiana Airlines will increase its freighter flights from Seoul to Tianjin.

"The overall air freight market from East China is on an upward trend. For Southeast Asia lanes, the rate has doubled compared to the previous month. There is a space backlog caused by large shipments of electronics. It is recommended to book at least 1-2 weeks in advance before departure."

South Korea: Space constraints for shipments to the U.S. remain tight, primarily driven by high demand from the semiconductor industry, with the trend expected to persist through December.

Malaysia: For air shipments from Kuala Lumpur, the manufacturing sector expects a slow fourth quarter, which might lower freight demand, the update added. "However, it is still recommended to plan ahead to avoid delays during the long holidays in December. For long-haul shipments from Penang, an increase in cargo is expected as factories ramp up production for the fourth quarter."

Singapore: As the peak holiday season approaches, capacity pressures and higher rates are expected for shipments from Singapore, with space remaining tight throughout Q4. It is advisable to book long-haul shipments at least 6-7 days in advance of the cargo ready date, the report added.

U.S.: The air freight outlook for North America in November indicates that rates coming in from Asia are likely to keep rising as we move through the fourth quarter. “Various factors will continue to put pressure on both available space and pricing. Key influences expected to shape the market throughout Q4 include seasonal trends, with costs typically climbing towards the end of the year as travel shifts away from summer and vacation patterns. The steady growth in e-commerce demand is also a driving force. Additional factors such as year-end activity, labour shortages, interest rates, a strong US dollar and elevated global oil prices will play a significant role in determining how rates and capacity evolve to close out 2024."

Europe: "Conflicts in the Middle East and Ukraine continue to disrupt airline cargo capacity between Asia and Europe, as carriers shift resources to the affected regions, leading to shortages elsewhere."

Mexico: The expansion of the Mexican air cargo market continues, driven by Chinese e-commerce platforms and Mexico's de minimis regime, which allows duty-free imports for goods valued under $50.

"In addition to regular flights connecting Hong Kong with Mexico City and Guadalajara, charter services have now extended to new routes from Shanghai, Shenzhen and Zhengzhou, reaching Mexico's newly opened Felipe Ángeles International Airport."