Consultant’s Insight: Change in de minimis could impact US air cargo volumes

E-commerce accounts for 20% of global air cargo volumes and the share could increase to 30% by 2027, according to IATA . However, this growth could slow if the United States revises its de minimis rule, making it more expensive for some e-commerce imports to enter the U.S. market. A shipment is categorized as de minimis when the value of the goods does not exceed $800, making it exempt from duty taxes, according to U.S. Customs and Border Protection (CBP). CBP processed 134 million de minimis transactions in 2015. This increased to 1 billion in 2023, with de minimis air bills of lading (BOL) accounting for 88% of the total. As of Jan. 31, CBP had already processed more than half a billion de minimis shipments and air BOLs accounted for 86% of the total de minimis BOLs. CBP estimates that nearly 90% of de minimis shipments coming into the U.S. are now entering through the small-package environment. This, according to the agency, illustrates how muchthe e-commerce sector has grown. Growth in de minimis shipments brings struggles With burgeoning growth comes an increase in counterfeits. Last month, CBP officers at the Port of Louisville in Kentucky seized a de minimis shipment containing 35 counterfeit designer watches. If genuine, the watches would have had a combined manufacturer’s suggested retail price ofmore than $11.7 million. Besides counterfeit concerns, some Chinese e-commerce providers are failing to comply with the Uyghur Forced Labor Prevention Act (UFLPA). The UFLPA went into effect in 2022 and requires proof that goods imported into the United States were not mined, produced or manufactured wholly or in part with forced labor. Chinese fast fashion brands Shein and Temu are likely responsible for more than 30% of all packages shipped to the U.S. daily under the de minimis provision and probably nearly half of all de minimis shipments to the U.S. from China, according to a 2023 report from the U.S. government Government reconsiders de minimis “Temu and Shein are building empires around the de minimis loophole in our import rules — dodging import taxes and evading scrutiny on the millions of goods they sell to Americans,” U.S. Rep. Mike Gallagher , a Republican representing Wisconsin, said in a June 2023 statement. “We need to take a hard look at this loophole that is being abused to tilt the playing field against American companies.” U.S. Sens. Bill Cassidy , R-La., and Michael Bennet , D-Colo., and U.S. Reps. Maria Elvira Salazar , R-Fla., and Adriano Espaillat , D-N.Y., introduced the Americas Trade and Investment Act, which, if passed would close the de minimis loophole by establishing country-level agreements of reciprocity in which de minimis levels for imports into the U.S. would reflect the de minimis rate established in the country where the items originate. The bill would also deny de minimis benefits to certain countries, including China and Russia. Any change in the U.S. de minimis policies will harm the global air cargo market, which has greatly benefited from growing e-commerce volumes. Global air cargo market demand grew 11% year over year for a third consecutive month in March, according to ocean and airfreight rate analytics platform Xeneta , which attributed the growth to “buoyant e-commerce volumes” and shifts from ocean to air cargo because of the conflict in the Red Sea region.

Consultant’s Insight: Change in de minimis could impact US air cargo volumes

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