News / End of de minimis will bring turbulence for airfreight shippers and forwarders

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Shippers and forwarders with long-term commitments for transpacific aircraft capacity could find themselves in a turbulent situation if airlines don’t make concessions as the US de minimis exemption is lifted this week.

Tomorrow, the US will revoke de minimis customs exemption for all postal items from China or Hong Kong valued less than $800. The packages will be subject to one of two duty rates elected by the carrier – 120% of the item’s value or $100 per item. And from 1 June, that duty will rise to $200 per item.  

Niall van de Wouw, chief airfreight officer at Xeneta, told The Loadstar that even though the de minimis rule will only be revoked for packages from China and Hong Kong, “that is by far the largest market for such volumes into the US and, hence, will have (close to) the same impact for airfreight as removing the de minimis for packages from all countries”. 

Derek Lossing, founder and senior industry advisor of ecommerce and transportation at Cirrus Global Advisors, estimated a $22bn impact for the global express and air cargo market over the next three years. 

He told The Loadstar: “The number of flights directly tied to e-commerce volumes over the Pacific is going to drop by as much as 90%, because China to US is the number-one airfreight tradelane in the world, and IATA says about 50% of that is e-commerce.  

“There’s a lot of airplanes that need to go elsewhere, and that’s really where the global impact comes in. We believe UPS, FedEx, and DHL, broadly, will each drop one to two flights a day on the transpacific.  

“You can absorb some of that capacity, but ultimately, if you have 20 flights a week to the US, and now you only have 10, ten aircraft are not all going to go to maintenance. They’re going to go somewhere. And that redeployment is what we think will put downward pressure on yields globally,” he added.  

Towards the end of 2024, The Loadstar reported that general cargo shippers were being put on airline  back-burners in favour of the capacity-hungry ecommerce shippers. Head of global airfreight at DSV Stefan Krikken said that “if ecommerce shippers sneeze, the rest of the world gets a cold”. 

At the time, he was referring to how the likes of Shein and Temu were driving transpacific demand, giving airlines the negotiating power as rates soared and demand far outstripped capacity. But “the dynamic is rapidly shifting now”, according to Mr Lossing. 

He told The Loadstar shippers booking charters, or on the spot market, currently had the upper hand when negotiating with airlines. He added: “We’re seeing charters are cancelling, because you can choose to contract charters or not, that’s kind of short-term”.  

However, he warned that forwarders with longer-term agreements could be in a more turbulent situation.  

“The US or UK are typically heavily reliant on spot, and the pricing agreements typically in many of the global markets are handshake agreements. But out of China historically, you have more longer-term agreements and a much higher rate of long-term fixed block space agreements. 

“I was talking to a reseller of air cargo capacity over the weekend in Shanghai, and he said a big percentage of his business was already locked in, so he’s extremely nervous because he has long-term commitments for capacity, and if his shippers have a large decline, that’s a problem,” said Mr Lossing. 

However, he predicted that, even though many forwarders secured long-term commitments on aircraft ex-Asia amid last year’s capacity concerns, “the chances that the airlines want to fly empty airplanes are low”. 

He added: “I think there’ll be some rationalisation of capacity because this is going to have a major impact. I think the airlines understand that China-US could be down 40% in volumes.

“Surely, if they value long-term relationships, they’re not going to be charging the freight forwarders for flights they’re not operating.”