The online shopping-fuelled surge in air cargo demand looks set to continue despite US government attempts to tighten import regulations for e-commerce.
Niall van de Wouw, chief airfreight officer at analyst Xeneta, said proposed regulations that will expand the types of goods excluded from paying duties under the de minimis exemption for goods worth less than $800 will “not put the genie back in the bottle”.
“[E-commerce platforms] Shein and Temu were not set up to expose a loophole in de minimis regulations. The cornerstone of the e-commerce business model is the massive and seemingly insatiable consumer demand in the West for low-cost fast-fashion, apparel and textiles,” he said.
“More than a billion shipments now enter the US under de minimis exemption each year, with the majority originating from Chinese e-commerce platforms. This extraordinary level of demand is not going away and the genie cannot be put back in the bottle.”
Xeneta figures show that e-commerce demand is up by around 30% this year while this summer there were more than 37m new downloads of the TEMU app alone in a single month.
“Companies like Shein and Temu have known for a long time that changes to US import regulations are inevitable, and I don’t think they will be overly concerned by the latest announcement,” said van de Wouw.
“Even if the new de minimis regulations cause prices to rise slightly on e-commerce platforms, they will still be very low cost. The US Government is trying to level the playing field for American retailers and manufacturers, but the price differential is so big that they aren’t even playing on the same field as Chinese e-commerce.”
A spokesperson for Temu told Air Cargo News that its business model does not depend on the de minimis exemption.
“Since Temu’s launch in September 2022, our mission has been to offer consumers a wider selection of quality products at affordable prices,” the spokesperson said. “We achieve this through an efficient business model that cuts out unnecessary middlemen, allowing us to pass savings directly to our customers.
“Temu’s growth does not depend on the de minimis policy. We are reviewing the new rule proposals and remain committed to delivering value to consumers.”
The Biden administration last week announced plans that would mean products that are part of Section 301, Section 201, or Section 232 trade enforcement actions are no longer be covered by the de minimis exemption.
The exemption allows goods with a of value of $800 or less to avoid paying duties and come under less customs scrutiny when being shipped directly to an individual.
Section 301 tariffs currently cover approximately 40% of US imports, including 70% of textile and apparel imports from China. Other items subject to these tariffs include shoes and machinery.
New data will also be needed to ship products under the de minimis exemption.
The Biden administration argues that the volume of goods coming into the country makes it more challenging to enforce US trade laws, health and safety requirements, intellectual property rights, consumer protection rules, and to block illicit synthetic drugs such as fentanyl and synthetic drug raw materials and machinery from entering the country.
They put “American consumers at risk, undercutting American workers and businesses, and resulting in the importation of huge volumes of low-value products such as textiles and apparel into the US market duty-free”.
Van de Wouw said that the US government has existing regulations at its disposal to stop illegal goods from entering the country.
“Stringent checks of every shipment entering the country would cause massive delays and hurt e-commerce businesses far more than any changes to de minimis regulations, but the resources required for this level of enforcement would be very costly. It would also have major repercussions for other businesses importing goods into the US by airfreight,” said van de Wouw.
Meanwhile, van de Wouw also highlighted a challenging end to the year with capacity under pressure due to rising volumes of e-commerce.
Xeneta figures show that the average air cargo spot rate from China to the US in the week ending 8 September was up 30% year-on-year at $4.53 per kg.
“There is a storm coming to the outbound China air freight market. Shippers need to take action now and have a clear plan in place for when the storm hits, such as working with their vendor to minimise the use of spot market capacity, which will likely come at spiralling costs,” he said.
Source: https://www.aircargonews.net/sectors/e-commerce-logistics/e-commerce-demand-not-going-away-despite-us-clampdowns/
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