While most companies are professing ‘uncertainty’ over the potential impact of the closure of the de minimis exemption for Chinese companies, two things are certain: tariffs, duties, and fees are already appearing on ecommerce invoices; and some etailers are pushing US buyers toward goods already in the US.
The significant concern for the airfreight industry is that a big drop in demand from US consumers will trigger a big drop in rates.
Freightos CEO Zvi Schreiber has gone on record saying that rates on China-US could halve, and Freightos noted on Tuesday that China-N America weekly prices had fallen 9%, to $5.09/kg, while to Europe they were down just 1%.
Airfreight demand is ultimately going to depend on consumer price elasticity. Social media is now awash with images, mostly of DHL invoices, showing additional processing fees, as well as tariffs and duties.
And it has become clear that platforms like Temu are now putting US-stored goods at the forefront of their sites.
The question for air cargo, though, is whether this is already leading to less demand for capacity – and Chinese New Year is making the statistics harder to interpret.
According to Rotate’s capacity database, in the past 24 hours, capacity out of China to Europe was 25% less than in the same 24-hour period a week ago, when China was on still on holiday. It is not yet clear whether factories have fully reopened – but the forwarders at least are back to work.
One analyst told The Loadstar: “We are hearing of the big shippers ‘giving back’ flights from Asia to North America, and incentivising customers to order stuff that’s already in US warehouses, to prevent required air transport.
“But overall consensus seems to be that nobody knows exactly, and everyone is looking for answers.”
There has already been lower growth in January, even accounting for Chinese New Year, said Xeneta’s chief airfreight officer, Niall van de Wouw.
“The lower growth in air cargo demand in January was not down to President Trump, nor, entirely, the earlier lunar new year. It also compares with an unusually high comparison in January 2024,” he said.
“Nonetheless, the air cargo market is entering a period of uncertainty, which makes planning extremely challenging.”
According to Rotate, 1.2m tonnes of ecommerce is “at risk”, the equivalent of 12,000 B747F flights a year – or 32 flights a day – into the US.
Last year, China’s cross-border e-commerce shipments to the US accounted for 25% of its total global sales – and filled over 50% of cargo capacity from the country to the US, according to Xeneta.
“Suspension of the de minimis exemption could, therefore, have a profound impact on air freight capacity between China and the US, and beyond, by prohibiting these import shipments from de minimis entry, increasing costs and adding time-consuming entry filing requirements and potential customs delays,” noted the platform.
Mr van de Wouw added: “Ecommerce volumes out of China grew 20% to 30% last year, following similar growth in 2023, so it’s going to take a sledgehammer to crack that level of consumer demand, and I’m not sure blocking de minimis alone is enough. China ecommerce was not set up to take advantage of de minimis loopholes – it has taken advantage of consumer demand for cheap, fast goods.
“Ecommerce products may be slightly more expensive if de minimis is removed, but they will still be cheaper than buying through retailers in the US. But delays in receiving the goods due to operational disruptions could have a bigger impact than price, because it takes away the attractiveness for consumers,” he added.
Most analysts say the Chinese etailers have already planned for this scenario, and are pushing US-made or -stored goods – but this will also lead to a reduction in freighter demand. Both Temu and Shein last year added to their US warehousing portfolios.
But Mr van de Wouw said: “Even if de minimis is blocked, the ecommerce retailers will still keep selling and shipping the goods. There may not be a significant impact on air freight rates in the short term in this scenario, even if it causes chaos at the receiving airport in the US.”
He added that it was too early to predict a slump: “Let’s wait and see. Maybe nothing changes.”
Much freighter capacity has moved in the past week, versus the week before, to perishables markets in South America and Africa – likely a byproduct of Chinese New Year factory closures, plus Valentine’s Day flower demand.
Carriers are keeping tight-lipped. Atlas Air, which carries vast amounts of ecommerce, did not respond to The Loadstar’s queries.
Source: https://theloadstar.com/de-minimis-cut-wont-hurt-demand-for-chinese-ecommerce-but-for-air-cargo/
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