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Cargo Newswire

E-Commerce Supply Chains Set for Disruption with Potential De Minimis Exemption Cancellation

February 27, 2025
in Supply Chain
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The future of e-commerce supply chains is being reshaped as the White House recently announced the end of the de minimis exemption for China, which previously allowed packages valued under $800 to be imported duty-free. The air cargo industry, which handles a significant amount of e-commerce goods, now faces uncertainty as it anticipates the long-term implications of this shift. The exemption, which temporarily had been reinstated due to logistical limitations in processing data and duties, is expected to return once US Customs and Border Protection’s systems are equipped to handle the surge in tariffs on millions of packages daily.

When the exemption is permanently lifted, platforms such as Shein and Temu—who have thrived by exploiting this duty-free loophole—are likely to see substantial impacts. According to John Lash, Group Vice President of Product Strategy at e2open, these platforms will need to rethink their business models, possibly consolidating shipments or establishing US-based distribution centers. The shift will lead to increased tariffs of up to 35% and additional filing fees, raising consumer prices by 20-50%.

The de minimis exemption, which has been in place since 1938, was initially introduced to support small businesses but has been increasingly leveraged by global e-commerce giants. Now, the industry must brace for change as these giants will face more complex filing requirements and rising costs associated with this regulation.

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As the landscape shifts, companies like Temu, which operates on low-cost and free-shipping models, may face the greatest challenges. Tzion, CEO of Publican, predicts that to stay competitive, Temu will need to shift some manufacturing to the US or alternative countries and ensure greater transparency in its operations. This move will require the company to comply with national safety and security standards while adapting to new regulatory changes.

The disruption is not just limited to e-commerce platforms. Air cargo rates, which have been elevated due to e-commerce demand, are expected to drop as fewer shipments are flown in from China. The cancellation of the de minimis exemption will likely prompt e-commerce companies to shift more volumes to ocean freight, seeking the benefits of established US-based warehouses and reducing reliance on costly air transport.

For freight forwarders, logistics operators, and airlines, the cancellation will bring significant challenges, with the increased complexity of customs processing and potentially longer delivery times. However, the shift may also provide opportunities for those able to innovate, particularly in the digital services space, creating new revenue streams while optimizing logistics operations.

The final impact of the de minimis cancellation remains to be seen, but industry players like Freightos predict a sharp increase in prices for goods shipping by air, with significant shifts in how e-commerce platforms handle fulfillment. The cancellation will likely push platforms to rethink their strategies, build US inventories, and shift manufacturing to countries outside of China.

This major policy change marks a pivotal moment for the e-commerce and air cargo sectors, compelling businesses to adapt quickly and rethink how goods are moved across borders in a world of increasingly complex regulations.

Tags: AircargoAirfreightCrossBorderShippingCustomsComplianceCustomsRegulationsDeMinimisExemptionDigitalServicesEcommerceEcommerceLogisticsEcommerceTrendsFreightForwardingFreightIndustryGlobalEcommerceGlobalTradeLogisticsInnovationLogisticsTransformationSheinShippingCostsSupplyChainChallengesSupplyChainDisruptionSustainableLogisticsTariffsTemuTradeRegulationsUSCustoms
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Devender Grover

Devender Grover

Devender was born in the year when the Beatles Group was formed. He holds two master’s degrees in English Literature and Public Administration. He also has an Honors degree in English Literature and a post-graduate diploma in Corporate Communications and Public Relations. He was closely associated with the Indian State Transport Undertakings and Ministry of Transport in his role as Corporate Communications and PR specialist for over two decades handling domestic and international organizations. He ventured into business forming his own Media House, Profiles Media Network Private Limited which is now a twenty years old company. Excelling as an editor, Marketing, PR, Anchor, and Advertising specialist, he is now expertly navigating the world of social media. A widely traveled professional internationally, Devender has a deep understanding of the Air Cargo, Cargo Business, Cargo Airports, Freighters and Cargo Industry at large.

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