The U.S. inventory cycle may have bottomed and turned upward, while global trade remains driven by Chinese exports

Overview

This report uses 80 charts to track high-frequency changes in global trade, freight rates, aviation, airports, roads, and commodity shipping. The core conclusion is that post-pandemic global trade growth driven by China continued in Q1 2026, while the U.S. inventory cycle is showing signs of shifting from destocking to restocking. On pricing, air cargo continues to rise sharply, driven by fuel costs and tight capacity, while container freight rates are following fuel surcharges and seasonal changes more closely.

Core views

The report’s core views include: first, global trade remains resilient, with container trade up about 5% year-over-year and Chinese exports maintaining double-digit growth; second, the U.S. inventory cycle is turning toward restocking and may begin supporting import demand from the second quarter; third, rising air cargo prices show stronger supply-constraint characteristics, while container shipping is currently relatively balanced; fourth, container shipping enjoys temporary balance in 2026 due to a delivery gap, but pressure from added capacity in 2027 to 2029 is very prominent; fifth, airlines are cutting capacity amid rising fuel costs, and long-haul routes have better pricing pass-through ability than short-haul routes.

Analysis framework

The report uses cross-regional high-frequency indicators including trade, port throughput, air cargo weight and yields, freight rate indices, fleet supply, port congestion, flights and ticket prices, airport passenger traffic, road traffic, and commodity shipping for cross-validation, and identifies turning points in the inventory cycle through U.S. inventories, the ISM new orders/inventories ratio, import forecasts, and port data.

Methodology notes

• Macro cycleInventory cycle tracking

  Use inventory levels, inventory-to-sales ratios, the ISM new orders/inventories ratio, and import forecasts to identify restocking turning points.

  When inventories bottom out, orders improve relative to inventories, and importers’ expectations recover at the same time, it usually means the demand chain is shifting from destocking to restocking.

• High-frequency trade monitoringPort and container throughput tracking

  Observe global trade momentum through port throughput, container imports and exports, and regional shipping route data.

  The report uses IMF Portwatch, the UN Global Platform, port authorities, and shipping data to compare trade trends across China, the United States, Europe, Southeast Asia, Latin America, and Africa.

• Transport supply and demandAnalysis of freight rates, fuel, and capacity constraints

  Distinguish the impacts of demand pull, fuel cost pass-through, and capacity contraction on freight rates.

  The rise in air cargo prices reflects fuel costs and tight capacity more strongly, while the increase in container freight rates is mainly related to fuel surcharges and seasonality.

• Industry supply cycleFleet and orderbook analysis

  Assess shipping supply pressure through active fleet, scrapping, idling, orderbooks, and delivery schedules.

  The report believes the container market is relatively balanced in 2026 due to gaps between delivery waves, but the pressure from new supply in 2027 to 2029 is very high in absolute terms.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Air cargo

  Benefits from tight capacity, fuel cost pass-through, and restocking demand.

  Strengths

  Rates are up high double digits year-over-year, with Middle East-related rates about 2x the same period last year.

  Weaknesses

  Cargo volumes in some regions are still down year-over-year, and European and Asian air cargo indicators are weak.

  Comparison

  Compared with container shipping, air cargo has more obvious supply-demand constraints and stronger price elasticity.

  Risks

  Fuel price volatility, capacity recovery, easing geopolitical conflict, or weaker-than-expected demand.

• Container shipping

  Supported in the short term by fuel surcharges, seasonality, and a recovery in U.S. imports.

  Strengths

  Global container volumes are still growing, Chinese exports are strong, and U.S. imports show signs of recovery.

  Weaknesses

  Freight rate increases are driven more by cost pass-through than strong demand, and utilization on Europe-to-Asia routes is low.

  Comparison

  Supply-demand shocks are weaker than in air cargo; 2026 is temporarily balanced, but the medium term is more constrained by supply pressure.

  Risks

  Too many new vessel deliveries from 2027 to 2029, low scrapping, and slowing demand.

• Airlines

  Rising fuel costs are prompting capacity cuts, while long-haul routes have stronger pricing power.

  Strengths

  Transatlantic trading is strong, and corporate and premium demand supports long-haul routes.

  Weaknesses

  Short-haul routes have weaker pricing power after fuel adjustments, and growth in some European air traffic is slowing.

  Comparison

  Long-haul is better than short-haul, and transatlantic is better than short-haul Europe.

  Risks

  Tight jet fuel supply, slower passenger growth, capacity recovery slower than expected, or continued oil price increases.

• Airports and road transportation

  Reflects slowing growth in travel and ground transportation demand.

  Strengths

  Some airports such as Zurich are seeing strong traffic growth, and summer seat growth in Spain is improving.

  Weaknesses

  Overall airport passenger traffic growth is slowing, while French road traffic and some cross-channel traffic are weak.

  Comparison

  Compared with the freight chain, the cyclical momentum in passenger transport and road traffic is milder.

  Risks

  Strikes, construction, weaker macro consumption, and pressure from fuel and ticket prices.

• Tanker and dry bulk shipping

  Affected by disruptions around Hormuz, Chinese commodity demand, and fuel costs.

  Strengths

  Crude tanker rates have strengthened due to Hormuz disruptions, while dry bulk freight rates are supported by Chinese commodity demand and fuel costs.

  Weaknesses

  Current tanker fleet growth is low, but the orderbook implies future fleet growth will accelerate.

  Comparison

  Compared with container shipping, bulk shipping is more affected by energy flows, geopolitical events, and commodity demand.

  Risks

  Easing geopolitical risks, normalization of petroleum trade flows, fleet expansion, and weakening commodity demand.

Key data

• Global container tradeAbout 5% year-over-year growth in Q1 2026Growth was mainly driven by Chinese exports.
• Chinese exportsDouble-digit year-over-year growthThe report says the trend of post-pandemic global trade growth driven by China has continued.
• Global container volumesAbout 4.5% growth year-to-dateBroadly consistent with the prior-year trend and still mainly driven by China.
• U.S. inventory cycleInventories bottomed in December and edged up slightly in MarchTogether with the ISM new orders/inventories ratio and port import data, this suggests restocking may already have begun.
• U.S. retailer import expectationsExpected to resume growth from Q2 2026National Retail Federation import volume forecasts support a turn in the inventory cycle.
• Air cargo pricesHigh double-digit year-over-year increaseMainly driven by fuel costs and tight capacity.
• Middle East air cargo ratesAbout 2x the same period last yearAlthough Middle East cargo volumes are recovering, rates remain significantly above last year.
• DHL European flightsDown about 5% year-over-year in Q1 2026Reflecting weak European express and air cargo capacity.
• Container fleet supplySignificant excess supply pressure from 2027 to 20292026 is currently more balanced, but the orderbook and new deliveries pose medium-term risks.
• Long-haul airline routesStronger pricing power than short-haul routesTransatlantic trading has been especially strong, and airlines have already cut some capacity due to fuel costs.

Impact & implications

If U.S. restocking continues, imports, port throughput, air cargo, and demand on some trans-Pacific/transatlantic routes may receive short-term support. Air cargo and long-haul airlines have stronger pricing pass-through ability, but fuel supply and oil prices remain key variables. Container shipping is supported in the short term by fuel and seasonality, but in the medium to long term it is necessary to watch for oversupply from new vessel deliveries. Slower growth in airports, roads, and short-haul air traffic suggests that travel- and ground-transport-related assets may have less growth elasticity than the freight chain.

Risks

• U.S. restocking may be weaker than expected, causing imports and freight demand to recover less than the report expects.
• Fuel prices and jet fuel supply may continue to worsen, squeezing airline profits and forcing further capacity adjustments.
• New container ship deliveries and low scrapping rates may intensify oversupply from 2027 to 2029.
• Geopolitical conflicts and disruptions related to Hormuz or the Suez may alter route efficiency and freight rates.
• Weak air cargo and short-haul aviation demand in Europe and Asia may offset the strength of long-haul routes.

What to watch

• Whether the U.S. ISM new orders/inventories ratio continues to improve.
• Whether import volumes at Los Angeles, Long Beach, and U.S. East Coast ports continue to recover after April.
• Whether National Retail Federation import forecasts translate into actual cargo volume growth.
• Whether air cargo yields and cargo volumes in the Middle East, Europe, and Asia recover in sync.
• Whether SCFI, Freightos, and container futures continue to follow fuel costs or begin to rise on demand-driven factors.
• Changes in container fleet deliveries, the number of idle ships, scrapping volumes, and port congestion.
• The pace of jet fuel supply, oil prices, and airline capacity cuts in Europe and Asia.
• Differences between transatlantic long-haul fares, PRASM, and short-haul European fares.