• 13 min

Current Position | Weekly Briefing August 5th - 11th

The Expeditors Podcast

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You're listening to Current Position, a weekly briefing from Expeditors mapping the shifts across trade compliance, regulatory changes, and global supply chains, plus some market insights from our Senior Vice President of Global Air, Karl Francisco. I’m Chris Parker, and here's the latest from August 5th to August 11th. 

Global Disruptions

Typhoon season is impacting major transportation hubs in Asia, with the 13th typhoon of the year hitting over the weekend. Typhoon Dolphin impacted China’s eastern coast between Shanghai and Fujian province. The storm brought heavy rain and winds that caused port, vessel, flight, and trucking disruptions. Terminal operations were stalled at several ocean ports, and around 60% of flights in and out of PVG and Hong Qiao airports were canceled. It is unclear how long it will take the ocean and airports to recover from the lost time. 

Global Customs & Trade Market

A filing by the U.S. Court of International Trade shows the U.S. has refunded about $100 billion of the $166 billion in IEEPA tariffs collected. The Supreme Court struck down the IEEPA “reciprocal” tariffs in February, but some critics say refunds are flowing back to corporations and not making their way to the end consumer. The Trump administration has since added new 10% duties under separate authority.  

Brazil recently announced plans to develop new trade agreements with China and South Korea. China and Brazil are exploring increased cooperation in areas such as artificial intelligence, critical mineral processing, and fertilizer trade. Brazil and South Korea, meanwhile, will initiate their talks through a working group tasked with identifying and addressing sensitive issues that have hindered past progress. 

Global Ocean Market

Maersk and Hapag-Lloyd’s Gemini Cooperation took another step back toward Red Sea movement this week. Gemini’s AE19 or SE4 service has been returned to its original transit via the Red Sea and Suez Canal rather than taking the lengthier passage around the Cape of Good Hope. Carriers began rerouting ships almost three years ago in response to attacks on commercial shipping. Gemini’s carrier partners said they made the move after thoroughly vetting the security conditions. 

Rates on the Asia to US East Coast trade lane keep rising to just under $10k, according to indices. The Freightos Baltic Index showed prices increased 1% to the East Coast to hit over $9,100 and a new high for 2026; rates to the US West Coast from Asia hit just shy of $7k. The National Retail Federation even revised its outlook on demand for the next few months as consumers continue to buy despite inflation.  

Global Air Market

Air demand from China to Europe fell for a sixth straight week, dragging down the global July market. WorldACD data shows chargeable weight from China and Hong Kong to Europe dropped 5 and 3% week-on-week. Experts believe this may partially be due to new EU import rules that went into place July 1. Average spot rates Hong Kong to Europe slid 15% since late June and 29% from mainland China. Despite these drops, worldwide July tonnages rose 5% year-on-year, and capacity ticked up 1% as Gulf-region belly space recovered. 

Global Ground Transport Market

A magnitude 7.4 earthquake near San José del Palmar, Colombia, is impacting transportation through the area. Authorities have declared a national disaster as significant structural collapses have occurred in Pereira, Manizales, Chocó, and Cali. Major transportation disruptions are expected, as many roads are fully or partially closed due to damage assessments and debris removal. 

Mexico plans to double truck capacity at the World Trade Bridge, North America’s busiest cargo crossing. The project would include widening the span and building a parallel bridge between Nuevo Laredo and Laredo to create a total of 18 commercial cargo lanes. Construction will start later this year with a goal of cutting crossing times and logistics costs between Mexico and the U.S. The Laredo gateway handled $36.33 billion in trade just in the month of May, which was up 19% over the same time in 2025. 

Up next, Karl Francisco.

Chris Parker: Karl Francisco, welcome this week to Current Position. What has been on your mind this week?

Karl Francisco: More capacity is needed in the Air market today, and that seems to be the case over the last six months or so.

Chris Parker: Yeah. What's going on with the capacity here?

Karl Francisco: Well, I can tell you, the primary drivers in air cargo right now - and I think everyone knows this - is the surge in hyperscalers, AI... anything to do with AI right now is extremely hot. You can't get enough of it right now. We continue to see a strong demand for capacity in the marketplace, but it's heavily concentrated in certain areas only in the world.

For example, Taiwan seems to be the hottest spot in the world today on exports of semiconductors and also anything you do with hyperscalers. You can't get enough capacity in that market today. The growth is unbelievable. Coming out of Taiwan, not only to the US but also to Europe as well.

The second-largest vertical in the air market is E-comm. Now E-comm, we know it has really made it very difficult for a lot of shipper, traditional air freight shippers, with the surge of E-comm going back about two years, there's been a lot of changes in E-comm over the last year with the US administration restricting de minimis entries. Back in May of last year, we saw a huge drop in demand of E-comm coming into the United States.

But today, here we are. A year later, it's back. It's back. So the E-comm companies out of China, Hong Kong. They've figured out a way to continue to utilize air capacity and ship products by airfreight. So they're back, right. So they're consuming a lot of capacity in the Trans-Pacific trade right now.

Chris Parker: And what has changed? I mean, de minimus effectively leveled out like those small parcels and such coming across. What has changed now? What is the strategy that's proven effective and able to maintain E-commmerce channels across from China to the US?

Karl Francisco: Well, the reason why it worked so well for the E-comm companies out of China, Hong Kong is they want speed. Speed is critical. They don't hold a lot of inventory in the US, and their model is B2C. So it goes from factory, shipper, directly to the consumer in the US. Right. So they're not holding a lot of inventory in the US.

So that's extremely critical. So they found a way to continue to utilize their freight by working around what the government is basically requiring them to do. So in essence they're a traditional shipper. Now they're finally entered with U.S. customs. They're paying duties on the merchandises coming in, and they're really good at it. So they know how to do it extremely well, and they're being very compliant in doing so, which is the most important thing.

Chris Parker: Yeah, absolutely. And from what you know and have heard from others, like has the experience changed for the “c”? Right. People ordering online, are they supposed to be experiencing slightly slower turnaround for receiving their product, or has that remained unchanged?

Karl Francisco: When de minimis went away, I think they were affected the customers a lot because things sort of just stopped, right? It took a lot for the E-comms to get back to where they used to be. This industry won't change as consumers continue to purchase online. That's just the way of buying retail today, and they'll continue to do so.

So we don't see that business going away. What's changed more recently in the E-comm world is shipping from China, Hong Kong to Europe, right. So the rules change in Europe in July of this year. That places a tariff on items going into the EU right now. Because of that, we believe that the buyer behavior changed a lot. It added additional costs and the volumes dropped like it did in the US.

So much so that we believe that the airlines now, they're considering shifting capacity from that trade into other hot trades in the world, because the demand isn't there like it used to be. But the E-comm companies are pretty quick to figure things out, and they believe that the volume will come back. It's just going to take some time for it to get back to where it used to be. 

But no doubt about it, it's not going to go away. It's here to stay.

Chris Parker: So with that demand, will mean a greater need for capacity, I imagine. But capacity is already strained because there's this industry. Semiconductors and hyperscalers is already taking up a large chunk of that. You said earlier that there's a large concentration of that capacity has gone towards that industry. Do you feel like this is going to be a permanent thing, a temporary thing, or will the Air market have to permanently adjust to the needs of the semiconductor industry to account for the other growing demand from consumers?

Karl Francisco: Sure. Yeah. I get a lot of calls from customers, and they're all wondering when will rates get back to normal, right? We all know the rates are elevated not only because of the war, but primarily because of demand. Demand is extremely strong in the world today on air freight. I think the numbers that I saw, the growth in demand in Q2 was close to 4 to 5% growth, which is really strong, and that's year-over-year growth, right.

And then when you think about capacity increase into the market, only 1% enter the market in terms of additional capacity. So you can see there’s supply and demand imbalance there. So in order for things to get back to normal in terms of rate a couple of things need to happen.

The first thing that needs to happen is the war. The war needs to end so we can get fuel back to where it used to be. Pre-war. Okay, that's still highly elevated. Not as much as it used to be in April, but it's still not where it needs to be, where it was back in March.

The second thing would be demand. What's going to happen with the surge with AI and semiconductors. And we're not seeing the end of that right now. We don't think the end is in sight right now. So as companies continue to scale, that hunger to move this product by airfreight is extremely strong right now. And we don't see that slowing down. So what it's doing is forcing a lot of the carriers to reposition aircraft to try and chase that volume.

And it's heavily concentrated in key markets. Again, you're talking about Taiwan, you’re talking about Southeast Asia, Vietnam, Thailand, Malaysia, and then also India to some degree. Okay, so we're not really sure when that's going to slow down, but that's creating a lot of problems in the airspace today.

Chris Parker: And what industries or verticals would you say are losing out as a result of this concentration in those regions because of that need from the semiconductor industry? Who's losing out right now?

Karl Francisco: Well, I think, the industrial electronics industries is sort of losing out on capacity right now, or they're experiencing more than higher prices in the marketplace. They're not used to paying those prices. That's number one. And in your traditional retail companies, your big-box retailers also. Now they don't plan to ship a lot of airfreight, but they do ship a lot of airfreight on occasion.

So they're also seeing elevated rates that they're not used to seeing. And it's all caused by, again, demand in the semiconductor and AI industry as well as the war. Right. The other thing about the war not only will fuel come down when the war is over, but we'll also see capacity back to normal. When you think about the world's largest carriers being in the Middle East, they were affected heavily by the war.

So we need to see the capacity re-enter the market at 100%. And that's really important too.

Chris Parker: And what are your thoughts around Section 301 duties about to hit 60 some countries or so? How is that going to go hand in hand with the volatility that we're seeing now?

Karl Francisco: On the Air side. The Air customers, I think, they're aware of how to handle the 301 duties, and they plan for it already. So I don't think we'll see much disruption when it comes to that. On airspace. We've gone through it long enough. Anything shippers are ready to deal with that where they've already shipped a lot of the products into the country, either by ocean freight or they plan for it. So we don't see a big disruption when it comes to that.

Chris Parker: Thank you so much, Karl. Appreciate it.

Karl Francisco: Thank you. Thanks for the time, Chris.

You are now at our current position. Links to everything we covered today, plus some extra articles of interest, are in the show notes.

And while you're there, check out the events and webinars we flagged for the weeks ahead. Thank you for listening, and we'll see you next week.

Be sure to subscribe to your preferred podcast platform so you don't miss future episodes. To learn more about Expeditors, you can find us on LinkedIn, Facebook, Instagram, and X, or simply visit us at expeditors.com. Take care, and I'll see you next time!