The air cargo industry may face significant setbacks if the new U.S. administration, potentially led by Donald Trump, enforces stricter regulations on low-value e-commerce shipments, as industry experts anticipate. Judah Levine, head of research at Freightos, suggests that changes could come to the “de minimis” exemption, which currently allows imports valued under $800 to bypass duties and stringent customs processes. Eliminating this exemption could affect shipping costs, customs procedures, and transit speeds, potentially undermining the economic viability of using airfreight for e-commerce goods.
Levine explained that, as planned by the Biden administration, goods under specific trade restrictions (like those under Sections 301, 201, or 232) would lose de minimis eligibility. He anticipates that a Trump administration might implement similar restrictions, particularly impacting Chinese imports, which could significantly lower air cargo volumes due to rising costs and extended customs processing times.
Currently, de minimis shipments enjoy fast customs clearance, with goods from China reaching U.S. consumers in about a week. However, without this exemption, processing could stretch to two or three weeks. Moreover, increased reporting and filing costs — from around $15 to $50 — alongside tariffs, which could climb as high as 60% under Trump, would make airfreight less appealing for low-value items.
While some foresee a continued demand for e-commerce despite regulatory challenges, others, like Brandon Fried of the AirForwarders Association, emphasize that maintaining the current de minimis threshold is essential for air cargo growth. Anticipating regulatory changes, shippers might front-load shipments, or shift volumes to ocean freight and build inventories closer to final destinations. For example, e-commerce platforms have been ramping up warehouses in Mexico and Canada to remain competitive, particularly in response to growing ocean volumes from China to Mexico.
In Trump’s previous administration, tariffs on Chinese goods — up to 25% — initially drove some air cargo volume as companies rushed to avoid increased costs. However, the long-term effect was a quieter air cargo market due to higher prices. With Trump’s recent campaign proposals hinting at tariffs of 10% on all U.S. imports and up to 60% on goods from China, Levine predicts a similar scenario for ocean freight, where most goods are moved.
In a high-demand, low-capacity environment, airfreight might offer relief, but only for urgent shipments. Given the higher costs associated with air cargo, a more economical solution like sea-air might appeal to some shippers. However, due to the sheer volume of container goods, a complete shift to air cargo would likely be unfeasible.
Source: aircargonews.net