Global trade faces softer demand, tighter capacity

Global manufacturing activity recorded its 12th consecutive month of expansion in July, although growth eased to its weakest pace since March, signalling softer momentum across the sector.

Demand for AI-related products and semiconductors remained resilient in Taiwan and South Korea, while consumer-focused cargo volumes weakened.

In ocean freight, market conditions have become increasingly uneven. Typhoons disrupted capacity at Chinese ports, tightening vessel availability even as demand continued to cool across most markets. As a result, freight rates have remained firm, with supply contracting faster than demand.

Meanwhile, Panama Canal draft restrictions and the cautious return of vessels through the Suez Canal continue to create uncertainty around long-haul routing, transit times and shipping costs.

The EU’s removal of the de minimis exemption on July 1 continues to weigh on Asia-Europe airfreight demand and rates, with the seasonal summer slowdown adding further pressure. A modest recovery is expected in September as quarter-end shipments increase and bookings pick up ahead of Golden Week, although e-commerce volumes have yet to return to previous levels.

On the Asia-US trade lane, demand remains largely driven by AI-related shipments from Taiwan, where tight capacity is pushing rates higher, while China-US volumes remain subdued. Intra-Asia traffic is also below year-earlier levels, with some China-Vietnam and China-Thailand cargo shifting to road transport due to lower costs and shorter transit times. Taiwan, South Korea, Malaysia, Thailand and Singapore continue to face tight airfreight capacity, while India is experiencing backlogs on services to Europe and the US West Coast due to airspace restrictions.

Meanwhile, ongoing Middle East rerouting is extending long-haul transit times, while typhoons in China and India’s monsoon season are creating additional ground-side challenges. South Korea is also reporting Asia-US load factors of nearly 90%.

From September 18, US Customs and Border Protection (CBP) may immediately void an Importer of Record number if Form 5106 contains inaccurate or incomplete information, with no cure period. Importers should therefore review all active records and remove outdated broker, forwarder, or agent details before the deadline. Meanwhile, a pending Section 301 overcapacity determination covers 16 economies and more than 75% of US imports, including major Asian markets, with no proposed rate cap or expiry date.

Meanwhile, Navi Mumbai International Airport is set to add freighter services connecting India with Asia, Europe and West Asia in the coming months, potentially easing capacity constraints on India-Europe and India-Asia routes as operations ramp up.