A sudden suspension of India’s postal consignments to the United States has highlighted the fragility of global trade when regulatory shifts outpace operational readiness.
Following Executive Order No. 14324, issued in Washington on 30 July 2025, the United States withdrew its de minimis exemption on goods valued under USD 800, effective 29 August. Enforced under the International Emergency Economic Powers Act (IEEPA), this measure subjects all postal consignments—regardless of value—to customs duties.
In response, India’s Department of Posts suspended the booking of US-bound parcels from 25 August, except for letters, documents, and gifts valued up to USD 100. This reflects both regulatory uncertainty and the inability of carriers and postal operators to comply with yet-undefined mechanisms for duty collection and remittance demanded by US Customs and Border Protection (CBP).
While the rule change may appear technical, its implications for air cargo, express logistics, and bilateral trade flows between India and the United States are far-reaching. For freight forwarders and airlines, the abrupt policy shift introduces uncertainty in one of the fastest-growing long-haul corridors, raising questions about competitiveness, compliance, and long-term supply chain resilience.
The United States was India’s largest trading partner in 2024, with bilateral goods trade exceeding USD 120 billion, according to India’s Ministry of Commerce. A significant share of these consignments—particularly textiles, handicrafts, electronics accessories, and jewelry—moved through low-value, high-volume air freight shipments that benefited from the de minimis exemption.
By enabling Indian micro, small, and medium-sized enterprises (MSMEs) and direct-to-consumer exporters to access the US market without prohibitive customs costs, the exemption played a critical role in sustaining competitiveness.
According to WorldACD, India–North America freight volumes grew 14% year-on-year in H1 2025, driven largely by e-commerce demand. The removal of the exemption directly impacts this segment, fundamentally altering cost structures and creating operational challenges for postal and express networks.
Though postal shipments represent a smaller share of trade by value, their role in air cargo networks is disproportionately significant. ICAO estimates that international postal consignments account for 10–12% of global air freight tonnage.
On the India–US corridor, postal flows contribute consistent volumes that help stabilize bellyhold utilization on passenger aircraft. The suspension disrupts not only airlines’ cargo revenues but also express and forwarder operations. Reduced postal uplift could weaken load factors, drive pricing adjustments, and increase competition for freighter capacity.
With India’s trade costs already 14% of goods value, compared with 8–10% in developed economies (World Bank), new customs-related inefficiencies risk further eroding competitiveness.
For freight forwarders, the immediate effects are mixed. Exporters unable to use postal channels may divert traffic toward express or commercial freight, boosting demand. Yet compliance risks and administrative burdens tied to unclear duty collection processes could undermine profitability.
Express operators face similar challenges. The Express Industry Council of India (EICI), in partnership with KPMG, recently projected the sector to double to USD 22 billion by 2030. However, the absence of predictable customs frameworks could slow growth.
The Ministry of Communication stressed:
“Express and postal services play a complementary role in enabling MSMEs and exporters to reach overseas customers quickly. Any uncertainty in customs rules risks discouraging small exporters and driving up costs.”
Without a clear framework, express networks may need to redesign routes, absorb higher operating costs, or pass them on to exporters, threatening the viability of cross-border small consignments.
The disruption may hit MSMEs hardest. Contributing 30% of India’s GDP and more than 40% of exports (World Bank), these enterprises rely heavily on low-value postal shipments.
The abolition of de minimis could make Indian products less competitive. For example, a USD 200 handicraft from Jaipur to New York, once exempt, will now incur duties, eroding margins. By contrast, Mexico and Canada, benefiting from preferential USMCA agreements, maintain tariff advantages.
This creates policy pressure for New Delhi to support small exporters—whether through export subsidies, simplified customs procedures, or accelerated trade negotiations with Washington.
The suspension underscores the interdependence of postal flows and broader air cargo resilience. Interline agreements that included postal consignments are now compromised, with several carriers citing “lack of operational readiness” to serve as CBP duty collectors.
India has ambitions to position itself as a regional air cargo hub, with major investments in Delhi, Mumbai, Bengaluru, and Navi Mumbai airports. If postal and e-commerce flows—seen as the backbone of future demand—are undermined, investor confidence may falter.
Additionally, displaced flows may be absorbed by competing hubs in Dubai, Doha, and Singapore, which offer smoother customs clearance and integrated express handling.
The episode offers important lessons for policymakers and industry stakeholders:
What began as a regulatory amendment in Washington has become a stress test for India’s air cargo and logistics system. The disruption illustrates how policy shocks reverberate across supply chains, affecting exporters, postal services, airlines, and airports alike.
As India and the US deepen their strategic and commercial ties, resolving the postal impasse will be vital to sustaining bilateral trade momentum.
For the air cargo industry, the episode serves as a reminder: resilience depends not only on infrastructure and fleet capacity but also on regulatory agility.
In the coming months, the key question will be whether both governments can rapidly harmonize customs processes to restore postal flows. Until then, freight forwarders, airlines, and exporters must navigate an environment of higher costs, tighter capacity, and elevated competition—conditions that could reshape one of the world’s most dynamic air trade corridors.
Source: https://aircargoweek.com/us-india-postal-disruption-raises-questions-for-air-cargo-and-trade-flows/
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