Air traders in Hong Kong began the year with increased optimism and are keen to explore new markets for growth despite ongoing challenges in major global regions.

According to the latest DHL Hong Kong Air Trade Leading Index (DTI) report — commissioned by DHL Express Hong Kong and compiled by the Hong Kong Productivity Council (HKPC) — the Air Trade landscape in Q1 2025 slightly improved, particularly in the Asia Pacific region, despite ongoing challenges in the Americas and modest recovery in Europe.

Following a significant decrease in the previous quarter, the Overall Air Trade Index rebounded by 1.2 points to 36.4 points in Q1 2025.

The report noted that this improvement was primarily driven by a 2.9-point increase in Imports, which was similar to Q1 2024, while (Re-)Exports remained relatively stable at 36.1.

"The Overall Air Trade Index saw a slight improvement, primarily driven by growth in the Asia Pacific region, as well as Electronic Products & Parts, and Imports," the report said.

In Q1 2025, the Asia Pacific index experienced a "considerable increase," mainly driven by the 10-point increment in China, which counteracted the significant decline observed in the Americas.

"A robust recovery was observed in the Asia Pacific Index (40 points, +6 points). All regions within the Asia Pacific experienced various degrees of increments," the report said, noting that the index of Europe showed a slight recovery (+1 point) this quarter, while the Americas index was the only market that experienced a decline, dropping notably by 8 points to 31 points in Q1 2025.

Both imports and (re-)export performance slipped, each recording a 7-point decline.

"This reflects that Americas-focused air traders were facing more complex and uncertain trading conditions."

Improved peak season performance, CNY outlook

Meanwhile, although less than one-tenth of local air traders reported a better-than-expected traditional peak season in 2024, nearly one-fourth expected better number of orders in the pre-Chinese New Year period in 2025 than the previous year.

"The traditional peak (Thanksgiving and Christmas Eve) of 2024 aligned with air traders' expectations, with over half (53%) of surveyed air traders expressing that the actual performance was as expected," the report said.

It added that pre-Chinese New Year (CNY) expectations were conservative, with only 22% holding a positive view and 43% being neutral.

From post-CNY until the end of Q1 2025, there was a decline in positive expectations to 18% and an increase in negative expectations to 39%.

"Amid China-US tensions and trade policy uncertainties, most air traders preferred a wait-and-see approach, while some considered exploring other markets for opportunities," the DHL Hong Kong Air Trade Leading Index said.

The results show that 76% of local air traders decided to closely monitor the situation with no measures to take at this stage. In comparison, 21% of local air traders will explore other markets.

Regarding the opportunities in new markets, the Middle East is perceived to have the highest overall market potential, with 45% of air traders recognising its opportunities, followed by Eastern Europe (33%) and Latin America (31%).

Regarding commodities, the report found that Eastern Europe has a greater potential for Gifts, Toys and Houseware (39%). Notably, around half (49%) of the air traders from Watches, Clocks & Jewellery sector indicated that the Middle East has significant potential, while 33% from Food & Beverage sector stated that Latin America has the greatest potential.

Additionally, the report found that 76% of local air traders are willing to engage in carbon reduction initiatives, an increase of 6% from the previous quarter, returning to a level similar to the first half of 2024; among those, 12% indicated a willingness to pay more than 11% of their logistics costs to achieve this mission.

"The air trade index slightly picked up 1.2 points, driven by the improvement observed in imports. Despite fewer than 10% of local air traders experiencing a better-than-expected peak season in 2024, 22% anticipate improved order volumes for the pre-Chinese New Year period in 2025 compared to the previous year," commented Edmond Lai, chief digital officer of HKPC.

"Yet, amid the uncertainties arising from the transition of the US presidency, the Americas' index dropped significantly by 8 points, with all commodity indices in the region experiencing declines of varying magnitudes, except for Gifts, Toys & Houseware," he added.

Lai pointed out that the Product Variety sub-index has also ranked at the top since the second half of 2023, while Sales Volume remained flat.

"This reflects the emergence of a new trend 'greater variety in fewer quantities', where small order volume and customisation have become the new norm. This shift indicates that large-scale production is no longer the most effective strategy in today's market," the HKPC chief said.

The DTI analyzes the key attributes of business demands based on a survey of more than 600 Hong Kong companies that focus on in- or outbound air trading. An index value above 50 indicates an overall positive outlook, while a reading below 50 represents an overall negative outlook for the surveyed quarter.