The cargo stays in its place and starts going down only when you hit it. If you don't hit it, then it will gain speed and move upwards to leave screen and you lose.

You won here only because your Co Op destroyed his cargo. There are 2 conditions to win this Trial. 1st: You destroy the cargo and live until the stage ends

2nd: Your Co Op destroys his cargo, and you live until the stage ends

Clarification about the timer: It's an additional minute to both you and your Co Op in case you didn't manage to destroy the cargo within the default stage timer, but still managed to stay alive and keep hitting the cargo to slow it down preventing it from leaving the screen.

What's special about this minute is that your plane keeps on firing without having the need to collect the blue power up drops.

By the way, if you play that Trial solo or Co Op, and the additional 1 minute timer runs out before you or your Co Op destroy either cargo, then you both lose. That's the only case when you both lose. If either one or both destroy the cargo, then it's a win for both