News / How US rule-changes are putting air cargo carriers in a 'tough spot'

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Threats from the US to introduce tariffs or remove its de minimis customs duty exemption could put airlines in a “tough spot” if their ecommerce clients are unable to fulfil minimum quantity volume commitments. 

This has led to questions of whether shippers, such as Temu and Shein, could apply force majeure to avoid these obligations. 

Force majeure is a legal term that excuses a party from fulfilling a contract if an “unforeseeable circumstance” prevented it – such as the pandemic or a natural disaster. 

Derek Lossig, founder and senior industry advisor for ecommerce and transportation at consultancy Cirrus, said that as a change in the de minimis level had long been discussed… although it could prevent a party from fulfilling a contract, it was not an “unforeseeable circumstance”. 

He said: “I believe the premise of these [US] executive actions were foreseeable… I can guarantee every large China-US firm has done sensitivity analysis for impact to top line revenue if this day arrived,” he said. 

“If you didn’t do it [fulfill your contract], you’re simply negligent… If you have done the analysis, how can you claim it was unforeseeable?

“When these brands wrote large air freight capacity buying contracts with the likes of Atlas Air, Western Global Airlines, or Polar Air Cargo, they 100% knew this was a business risk.” 

Partner at HFW Matthew Gore added that force majeure did not generally operate to excuse a party from their obligations “merely because performance has become more expensive”.  

“If the de minimis exception is now no longer in place and exporters now must pay tariffs, this is merely economic hardship. Performance is still possible,” he told The Loadstar.  

But he added that “the position is arguably less clear if the effect of the de minimis repeal has led to the US CBP rejecting freight from entering the country”.

Mr Gore said the effect of any clause would depend on the exact wording of the provision, the executive order made, and the repercussions it has, as no two contracts were the same.  

For example, one agreement could have a force majeure clause including “airport congestion” and “acts of government” which are beyond the control of either party – “the question then becomes if performance of the shipper is still possible,” he said.  

Kendy Choi, commercial director at China’s Cainiao Group, told The Loadstar: “Ecommerce players will respond based on their business models and strategic priorities.”  

She explained that some may focus on operational adjustments, while others, “particularly those with a cost-driven approach”, may prioritise “contractual avenues to manage their financial exposure more directly”. 

She added:“What remains clear is that adaptability and strong partnerships are key to navigating uncertainty in our industry,” she said.  

And Ms Cusack highlighted that “if the relationship is strong, the parties merely need to renegotiate in light of the change in global politics and economic circumstances”.  

She added: “If you are inclined to scoff that no business relationship is that strong, then why aren’t you using specialist lawyers to draft all your contracts and stop relying on the so-called strength of your handshakes?” 

But whatever the contractual outcome, Mr Lossig warned that large capacity operators would be left “in a tough position, to say the least”.  

He explained: “Clearly once the [de minimis] executive order is signed, the planes will not be as full. And it will make sense to cancel some capacity – 10% out of the start.” 

Polar Air Cargo and Western Global Airlines did not respond to The Loadstar’s request for comment.  

Comments included in this article from lawyers are not intended to be taken as legal advice