Prices rise, fees imposed ahead of de minimis end

The United States’ de minimis exception for goods from China and Hong Kong ends May 2, and many shippers front-loaded capacity in the previous few months to avoid higher rates and paperwork. Under de minimis regulations, companies shipping goods into the U.S. are not required to pay tariffs on shipments valued at less than $800. [caption id="attachment_57148723" align="aligncenter" width="1920"] Temu, like other online marketplaces, has seen increased prices in response to retaliatory tariffs and the looming end of de minimis. (Courtesy/Raul Ariano/Bloomberg)[/caption] Starting May 2, postal items from China and Hong Kong that would previously have been covered by de minimis will be subject to a duty of either 30% of their value or $25 per item, whichever is higher. The flat fee will increase to $50 per item on June 1. The U.S. ended de minimis for goods from China and Hong Kong in February but reversed the decision a few days later after the increase in parcels requiring formal entry, something not required under de minimis, overwhelmed U.S. Customs and Border Protection (CBP). This issue has been rectified, according to the White House. The U.S. also imposed a flat 10% tariff against all countries, effective April 5, and has delayed implementation of reciprocal tariffs pending negotiations with affected countries. The only country excluded from the reciprocal tariff reprieve is China. Following a tit-for-tat escalation from the U.S. and Chinese governments, the U.S.’s tariff against China is now 145%, and China’s against the U.S. is 125%. Additionally, CBP lowered the value for packages requiring formal entry processing to $800 from $2,500, effective April 5. End of de minimis Ending the de minimis exemption on Chinese imports will cause volumes to drop, Lee Klaskow, senior logistics analyst at Bloomberg, told Cargo Facts last month. “The end of de minimis and threat of new tariffs could pull forward demand and drive rates higher in the near-term,” he said. “However, reduced demand and more difficult comparisons will lead to weaker rates once the dust settles. “That being said, rates will be volatile, to say the least,” he said. Earnings expectations for parcel carriers including FedEx and UPS will drop the longer the tariffs are sustained, “as the levies’ inflationary nature will crimp demand and add operational costs,” Klaskow said. Carriers can limit the harmful effects of the tariffs and de minimis elimination by diversifying their routes and remaining flexible , carriers said at Cargo Facts Asia 2025 in March. “Trade is like a flow,” Robert Zhang, commercial director of SF Airlines, said during a panel at the event. “If it is blocked here, then it will go somewhere else.” UPS adds surcharge to parcels from China UPS was the first integrator to add a surcharge to U.S.-bound parcels from China, Hong Kong and Macau. The “surge fee” of 29 cents per pound, which is applied on the billable weight of a shipment and subject to fuel surcharges, went into effect April 13. No end date was announced. Revenue growth in UPS’ international segment was driven by a 7.1% increase in average daily volume in the first quarter, according to this week's earnings report. “Demand for U.S. inbound services surged as customers pulled forward inventory purchases ahead of expected tariff changes,” Chief Executive Carol Tome said on the company’s April 29 earnings call. UPS expects the tariffs and changes to de minimis to weaken demand on the China-U.S. trade lane, Tome said. But this weakening will be partially offset by growth on China-to-non-U.S. lanes, and growth on lanes from the rest of the world to the U.S. Nevertheless, there remains much uncertainty around the China tariffs and end of de minimis, Tome said, adding that it will mostly affect UPS’ customers that identify as small- and medium-sized businesses (SMB). “Many of our SMBs, as we talk to them, are 100% single-sourced from China,” she said. “Our SMBs, who don't have the working capital capabilities to pull forward inventory, are saying, ‘Wow! How are we going to handle this cost increase that's coming our way?’ “It doesn't mean that they're not trying to look for alternate forms of supply,” she said. “They're working with original equipment manufacturers, trying to move to other countries, but as you can appreciate, the large companies get to take the first phone call and they're the ones that are willing to work on changing supply chain.” FedEx charges disbursement fee FedEx imposed a levy of 45 cents per pound on U.S.-bound parcels from China, Hong Kong and the Philippines on April 15. This “demand surcharge” will expire May 2. At that time, FedEx will implement a disbursement fee of $4.50 or 2% of duty and tax, whichever is greater, on U.S.-bound shipments valued at less than $800, according to FedEx. The fee applies to its international package and express freight services. If a shipper uses a third-party billing service in which duties and taxes are paid outside of the destination country, they will instead be charged a duty- and tax-forwarding fee of $8.50 or 2% of duty and tax, whichever is greater. “We're working very closely with our customers to be able to prepare themselves for any change, whether it's de minimis or change in market due to tariff,” Chief Customer Officer Brie Carere said on FedEx’s March 20 earnings call . “From a de minimis perspective ... we are very ready from an operational capability perspective.” DHL’s Meyer ‘skeptical’ of wait-and-see approach DHL Group last week temporarily halted shipments of packages headed to the U.S. and valued over $800 to give the company time to address a surge in formal customs clearances. Despite signs of front-loading from shippers in Q1, many of DHL’s customers have taken a wait-and-see approach to the evolving tariffs and de minimis elimination. “Some of our customers don’t act before a deadline because they’re not sure whether the policy stays in effect,” CEO Tobias Meyer said on the company’s April 30 earnings call. “But we’ve seen some front-loading and shifting of inventories and also, thereby, higher demand for airfreight for warehousing, especially in Asia.” Meyer is “skeptical” of the wait-and-see approach, as it delays investment decisions, he said. “Adjustment of pricing, obviously in a space like e-commerce, [is] an absolute necessity,” Meyer said. Higher prices for products and front-loading are “rather positive for a logistics player like us, who has a strong global footprint and a disproportionately high market share in non-direct U.S. trade lanes,” Meyer said. As a non-U.S.-based integrator, Bonn, Germany-based DHL will likely be less affected by U.S. changes to tariffs and de minimis than some competitors. U.S. imports account for 13% of global imports, meaning 87% of global imports are not subject to the recently imposed and threatened U.S. tariffs and will operate “very much business as usual, growth as usual and a stable performance going forward,” Maja Marciniak, senior economist at IATA, said at the World Cargo Symposium last month. Amazon, Temu, Shein hike prices Many online marketplaces, including U.S.-based Amazon and China-based Temu and Shein , have seen the price of goods rise in recent weeks. In the past week, Amazon prices have increased an average of around 29%, according to SmartScout, a software tool that analyzes Amazon. About 25% of the price increases come from sellers based in China, according to SmartScout. Amazon has not announced any transport or delivery surcharges. E-tailer Temu began adding import charges of about 145% last month, in addition to increased prices on goods. “Items imported into the U.S. may be subject to import charges,” Temu said on its website. “These charges cover all customs-related processes and costs, including import fees paid to customs authorities on your behalf.” Shein has not added an import charge but has hiked prices. At checkout, customers are now met with a notice saying: “Tariffs are included in the price you pay. You’ll never have to pay extra at delivery.” Register now for Cargo Facts EMEA, an essential regional event for industry stakeholders, on May 6-8 at the Shangri-La Bosphorus in Turkey.

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