Airfreight rates could plummet – along with demand – following the US suspension of the exemption for de minimis goods.
Over the weekend, the Trump administration, in addition to adding tariffs to goods from Canada, Mexico and China, suspended access to Section 321 customs de minimis entry process for shipments under $800 from those countries – often ecommerce packages.
According to US Customs & Border Protection, it processed some 4m de minimis shipments a day in 2024, up from 2.8m a year before. The majority of the more than a billion de minimis shipments CBP processed arrived by air – 88% via international mail, express courier services such as UPS, DHL, and FedEx, or as cargo on commercial airline flights.
The hit to air cargo will depend on the price elasticity of the US consumer, but costs will certainly go up. While many items will still be able to come in under the $800 rule, it excludes goods under Section 201/232/301 tariffs.
Easyship said that, while previously there was $0 duty for de minimis shipments and a minimal, if any, customs broker fee, now there would be an entry charge of $15 to $50. And then you add the tariff – which in the case of a $500 shipment of Chinese electronics goods would be a further 25% to 35%. In this example, the price of a $500 phone from China, for example, would rise by at least $140, likely more.
“For air cargo it’s going to be the tariff that’s going to hit; it’s going to make your iPhone, instead of being say $1,400, possibly $2,000, or even more,” said Marco Bloemen, MD of Aevean last week at WCS.
“In the case of ecommerce, it’s more around regulations, paperwork, longer processing times. That might be the impact. It’s a much, much higher cost. So it’s something we need to look at.”
The hit to air cargo could be significant. Last year air cargo growth was driven by ecommerce rather than traditional markets. Chinese air cargo volumes were 20% higher than in 2023, with an additional 3.26m tonnes shipped. That equates roughly to 32,600 flights, assuming 100 tonnes on board – a significant number of freighters.
According to some estimates, 88 flights arrive in the US each day carrying de minimis shipments – although not all from China – which could account for some 8,800 tonnes of cargo – some 3m tonnes a year. Alongside longer entry times, more data processing and considerably higher costs for the consumer, airfreight’s edge in this market will be lost.
“Retailers such as Temu, Shein, and Amazon have had plenty of time to prepare – Trump’s order has just accelerated the timing by a few months,” said CEO of consultancy Ti John Manners-Bell.
“What may happen is that importers return to a more traditional model of buying products in bulk, clearing them, and then distributing them from US warehouses. Shippers will use more 3PLs for both the clearance and the storage of goods in the US, including duty deferral schemes. This will see more pressure on the US warehouse market.
“Temu apparently has already started onboarding Chinese sellers which have inventory held in US warehouses to its platform. This trend will pick up pace.”
As to the impact on airfreight capacity, Mr Manners-Bell said: “I would imagine that if the business model changes to that outlined above, there will be a move from air cargo to lower-cost sea freight. In addition there may also be changes in US consumer buyer behaviour from the higher costs, providing a headwind to cross-border direct-to-consumer markets.”
If that cargo shifts to sea, there will be negligible impact on ocean rates and capacity, with 3.2m tonnes, if shipped in a 40ft container and maxing out at 40 tonnes per box, equating to just 80,000 teu – or 10 medium-sized ships.
Another source in logistics added that the suspension was not yet fully clear in terms of scope and time. But they added: “It could be an increased demand for warehousing/distribution/e-fulfilment in the US, including ground transportation, but it’s too early to say.”
Chinese etailers Temu, Shein, and Alibaba have been contacted by The Loadstar for comment. Shein declined.
Source: https://theloadstar.com/airfreight-expected-to-take-a-hit-from-de-minimis-exemption-suspension/
