THE cost to fly goods to the US from China is poised to fall as much as 50 per cent after President Donald Trump cut off a key tariff exemption used by Chinese e-commerce giants including PDD Holdings’s Temu and Shein, according to Zvi Schreiber, chief executive officer of Freightos Group, a leading air-freight booking platform said.
The air cargo market between Asia and North America has been stretched for the past two years, as strong demand in the US for Chinese e-commerce tightened capacity. Now that the Trump administration has blocked a provision that allowed e-retailers in China and Hong Kong from transporting millions of small packages a day directly to American consumers duty-free, room for freight on planes should become more readily available, putting downward pressure on rates.
The cancelled shipping exemption was part of an executive order adding a 10 per cent tariff on all Chinese imports. Restrictions on Chinese e-commerce into the US looked to be widening further on Tuesday when the US Postal Service (USPS) said it was temporarily suspending inbound packages from China and Hong Kong Posts. The USPS reversed that decision on Wednesday (Feb 5).
Since 2023, a surge in Chinese e-commerce demand helped drive up the cost of air freight between the world’s largest economies to the highly elevated range of US$5 to US$7 per kilo. The current rate is US$5.09 – unchanged from last week, according to data from Freightos.
Based on the volume of parcels blocked by Trump’s suspension of the so-called “de minimis” exemption for goods valued less than US$800 from China and Hong Kong, those rates could slump back to US$3.50 to US$3.80 a kilo – the range just before the surge began, Freightos calculations showed.
“We could see that crashing right back down,” Schreiber said this week. “It could easily halve if all the e-commerce stops.”
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Transpacific rates might go below US$3 per kilo given that capacity has grown to record levels, and transatlantic rates could also decline if carriers shift spare capacity to that route, according to Freightos, whose WebCargo platform connects shippers with cargo space available on 67 airlines including American, Lufthansa and Qatar Airways.
The US’s de minimis exemption was far more generous than similar measures in most other countries, where it typically applies to goods valued at less than US$50 to US$100, Schreiber said. It was being used to a far greater extent than US authorities anticipated, he added.
Some Chinese companies shipped bulk items to Mexico and packaged them in smaller parcels to qualify for de minimis before trucking them across the border, said Schreiber. To meet demand now, they will need to transport their merchandise along more traditional ocean routes that are slower and subject to US tariffs.
“There will be a fundamental shift in how these goods are imported into the US,” Schreiber added. BLOOMBERG
