• The results of the US midterm elections are in, and both the House of Representatives and the Senate have changed control from the Republicans to the Democrats.
• Reuters have reported two statements from analysts highlighting the potential implications this could have on the US domestic AI market, as a slowdown in development may follow regulatory pressure from Democrats in the houses.
• Lanes from Asia Pacific to the US have been driven by the growing demand for parts related to AI infrastructure such as semiconductors for data centres.

The results of the US midterm elections are in, and both the House of Representatives and the Senate have changed control from the Republicans to the Democrats.

The Cargo Airline Association is looking ahead positively.

‘The Cargo Airline Association looks forward to working with newly elected members of Congress and committee leadership in the 120th Congress to advance policies that support aviation safety, promote a strong and competitive U.S. air cargo industry, and recognize the vital role air cargo plays in connecting American businesses and communities to markets around the world,’ it stated to Air Cargo Week.

The implications of this turnover are yet to be made clear on major talking points such as tariffs, trade agreements and wider investment in the logistics sector. Comments from two analysts to Reuters today perhaps suggest it may impact AI-related shipments.

“A Democratic sweep of Congress would put pressure on tech and potentially bring regulatory pressure on everything AI and possibly slow down the wild, wild west growth figures that we see daily and often take for granted. While Democrats ​rule Silicon Valley, tech CEOs are rooting for Republican victories tonight. Musk was the Hail Mary for Republicans leading down to the wire. Unfortunately, his large infusion of cash to back red states could not overcome higher utility bills, prices at the grocery store and prices ​at the gas pump,” Jake Dollarhide, CEO, Longbow Asset Management in Oklahoma told Reuters.

“I think the fear is that the pace of the AI infrastructure rollout could slow, potentially quite markedly in Texas, as they start to digest ⁠exactly what mandate they might have in terms of AI. Going into this, we were talking about the importance of the Texas and Georgia governor races. Those two states effectively make up about a third of all AI data centre spend and projects. If both of those go Democrat at ​the governor level, the potential for it to slow is very much there, and that would obviously cascade through to the rest of the AI sector,” Tapas Strickland, Chief Marketing Strategist at Moomoo ANZ in Sydney equally stated to Reuters.

What could this mean for the AI and airfreight?

With WorldACD data explaining the strong demand in Asia Pacific to US lanes through AI-related shipments, ‘part of the difference is very strong ongoing demand this year in the US for AI-related high-tech air imports, particularly from Taiwan and parts of Southeast Asia,’ political interference could impact the urgent time-critical nature that these parts have required.

AI-related cargo was reshaping key trade lanes in July this year, and continues to. Asia Pacific to North America corridors saw significant rate increases, and it AI-related shipments have rivalled the e-commerce volumes that have continued to weaken after years as a major air cargo growth driver.

AI demand is one reason Asia to the US rates are so high. Southeast Asia to North America rates are about 40 percent above last year, partly because of data centre volumes according to Freightos. Less demand would likely push rates down.

If what these statements suggest transpires, and potential political intervention from the Democrat led houses sees a slowdown in AI development, what may the future of this commodity segment hold? Will the AI-shipment boom be cut short by policy as opposed to demand?

Asian exporters would be most exposed, along with the airports and handlers forming part of this specific ecosystem.

“Tighter AI regulation could disrupt Big Tech companies’ capital expenditure plans. These companies need to build data centers to deploy the computing capacity they have committed to providing to customers such as OpenAI and Anthropic, and ultimately convert those commitments into cloud revenue,” Kim Seok-hwan, senior analyst at Mirae Asset Securities told the Korea Times.

From this perspective, commitment and expectations on semiconductor and other chip manufacturers may be plunged into uncertainty.

Any move by a Democratic-controlled Congress to slow AI development could weigh on transpacific air cargo, yes.

The power of the presidential veto, the global spread of data centre investment and long project timelines indicate, however, that any possible implications are currently appearing to be gradual rather than sudden.

The post Two houses blue: US midterms and potential AI airfreight implications appeared first on Air Cargo Week.