Latest news with #DeMinimis
Yahoo
a day ago
- Business
- Yahoo
Trade Pressures Prompt IATA to Lower 2025 Air Cargo Demand Forecast
Air cargo demand for 2025 is tapering off further than initially forecast as the Trump administration's tariffs and the removal of the de minimis provision for Chinese goods entering the U.S. take their toll on trade. According to the International Air Transport Association (IATA), total demand will inch up just 0.7 percent this year to 275.7 billion cargo tonne-kilometers (CTKs), down from the 6 percent CTK growth first projected in December. In total, volumes carried via air are now projected to reach 68.6 million metric tons, up 0.5 percent from 2024, instead of the previously calculated 72.5 million metric tons. More from Sourcing Journal April Air Cargo Demand Climbs 5.8% as De Minimis Reform Drives Pre-Deadline Surge CMA CGM's $600M Vietnam Port Project Reflects 'Sharp' Container Demand Urban Outfitters Spurns Air for Ocean Freight as Tariffs Settle in IATA had teased last month that the lobbying group was set to scale back its projections, citing the downside risks that have increased throughout the year. DHL has felt the lessening demand thus far to kick off 2025. Its DHL Express division saw time-definite international parcel volumes sink 7.1 percent to 975,000 items per day in the first quarter. The decline came as the company ended some third-party air cargo partnerships in the early months to cut excess capacity, including one joint venture with Atlas Air. The logistics giant has sought to focus more on profitability amid the dampened demand, and unveiled Monday it is raising costs to ship certain private customer parcels and small packages via air out of Germany. The 'moderate' price hikes will begin July 1, and will vary depending on the destination country. For example, sending an 'extra-small' package to North and South America will soon cost 16 euros ($18.30), rather than the current 12 euros ($13.70). A medium-sized package sent to the same region would jump to 22.49 euros ($25.70) from 18.49 euros ($21.15). 'Reasons for the necessary price adjustments starting in July include significantly increased labor, transportation, and delivery costs,' said DHL in a statement. 'Additionally, there are higher requirements and thus a greater effort for handling international shipments transported by air.' Announced alongside the price changes, DHL is expanding the use of the mobile parcel label, which allows customers to ship parcels and small packages to non-E.U. countries without the need to print shipping labels. As DHL aims to simplify some experiences, the air cargo demand equation remains impacted mostly by factors well out of carriers' control. In April, air cargo had its highest demand numbers for the year at 5.8 percent CTK growth, IATA said, surpassing the first quarter's 2.4 percent annual increase. But that April rush came in largely due to the May 2 closure of the de minimis provision as businesses sought to avoid the extra import tax now charged on parcels worth more than $800. According to the IATA, the de minimis trade accounts for 7 percent of Asian CTKs and nearly 3 percent of global air cargo traffic. With that in mind, demand growth is likely to decelerate further going forward, said the report. 'This trade is likely to drop significantly, which will have a considerable impact on freight rates to the U.S. from China,' the updated outlook report read. 'However, Chinese e-commerce brands may shift their focus from the U.S. to other markets, or even ship their products from other countries.' For 2025, the association also expects a decline in air cargo yields of 5.2 percent from last year due to the reduction in anticipated traffic and lower jet fuel prices—a far cry from the previous outlook that rates would be stable year over year. As air freight rates continue their descent, the easing of ocean freight rates throughout 2025 compared to the year prior has played a role in keeping more cargo out at sea. The Red Sea crisis effectively gave air freight a rare comparative pricing advantage, according to the IATA, as average container prices spiked to nearly $6,000 last summer due to the mass rerouting of vessels around southern Africa's Cape of Good Hope. Although ocean carriers have still mostly been sailing around Africa, ocean spot freight rates are now $2,508 on average, according to Drewry's World Container Index, mirroring rates seen at the start of the crisis. With ocean rates back to a more manageable level in recent months, air freight costs look less attractive for shippers in comparison, albeit less expensive than 2024. Despite the industrywide headwinds, IATA's director general Willie Walsh acknowledged 'it will still be a better year for airlines than 2024,' although slightly below previous projections. 'We anticipate airlines flying more people and more cargo in 2025 than they did in 2024, even if previous demand projections have been dented by trade tensions and falls in consumer confidence,' Walsh said in a statement. 'The result is an improvement of net margins from 3.4 percent in 2024 to 3.7 percent in 2025. That's still about half the average profitability across all industries. But considering the headwinds, it's a strong result that demonstrates the resilience that airlines have worked hard to fortify.' Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
4 days ago
- Business
- Yahoo
How Should Brands Think About Cross-Border E-Commerce Amidst Uncertainty?
Cross-border e-commerce is likely to face heavy impacts from the changing global trade landscape, particularly as U.S. President Donald Trump's tariff strategy remains in flux. Data from FlavorCloud, which helps optimize cross-border shipping and returns, shows that apparel's cross-border conversion rates dropped by 5 percentage points—from 13 percent in February to 8 percent in March, when Trump started introducing, and in some cases soft-launching, what would end up being, in some cases, double or triple-digit duty rates. More from Sourcing Journal Can Tech Plug the Gaps Between Immigration Policies and Reshoring Aspirations? Federal Appeals Court Grants Trump Temporary Relief on Tariff Ruling April Air Cargo Demand Climbs 5.8% as De Minimis Reform Drives Pre-Deadline Surge Right now, the tariffs Trump set forth on 'Liberation Day' are on pause for most countries. Rathna Sharad, CEO and founder of FlavorCloud, said she anticipates that, once that pause is up—barring any further court intervention for overreaching, that is—Trump will introduce lower tariff rates on most countries. 'At the end of 90 days, I expect [rates] to be something more reasonable. We may have seen the worst of [it]. The 145 [percent tariff on China] was enormous, and it has impacted pretty much every single brand in a lot of ways,' Sharad said. Nonetheless, she advised that companies hoping to continue building out their cross-border business stop to consider their sourcing patterns, as so many companies have been since Trump began his second term. If prices on goods increase because of country of origin, and sending goods internationally is already more expensive, that could see companies passing a higher portion of the cost on to their international customers. Sharad said the smartest companies had already started building out a multi-sourcing strategy. 'It's not easy to implement alternative sourcing within a month or two. It takes a while to do that, but what is really important is that those that have made inroads [by] already thinking about multiple suppliers—or that were considering alternative sourcing options before—were able to make that switch relatively easily,' Sharad said. Fashion and apparel, as a category, has already been struggling when it comes to growth for cross-border e-commerce; FlavorCloud's data shows that, while other categories—like beauty, health and wellness, have seen rapid growth between 2024 and 2025, apparel and fashion has seen a 3.3 percent decrease. That pales in comparison to health and wellness' 201.2 percent increase and beauty's 46.6 percent uptick. Sharad said that slump could be attributable to two main factors: longevity in the cross-border market and price fluctuation. '[Apparel] has grown over the years pretty significantly, whereas these other categories are still brand new for cross border, so they're emerging,' she said, noting that apparel has also seen 'more significant price point and margin issues' than other sectors growing rapidly. For apparel companies, Asia, Africa and Latin America could be opportunity zones for further sales; in each region, apparel ranked the number one cross-border category in 2024. The report suggests that, while apparel is a top category in many markets, its stronghold varies by location based on pricing and delivery, which FlavorCloud contends should vary by region. Sharad said the company helps its clients determine those exact considerations, which she expects will only become more important as final—or semi-final—tariff rates come from world leaders. For apparel in particular, getting the mix right on products could help foster loyalty, which seems to be top of mind for many brands and retailers amidst uncertain economic times. Sharad said that, like domestic customers, international customers expect fast delivery, free or low-cost shipping and easy returns to stay truly connected to a specific brand. To be able to deliver on those considerations is likely to help retention rates, she said. 'They're coming back because they love the products, because they're not getting those products locally,' Sharad said. As she thinks about what's coming down the pike, she said unreliability continues to loom—so diversifying sourcing strategies would be a wise move to help make pricing most palatable for customers, and for brands themselves. 'Moving to multiple sourcing partners is an important thing for brands to invest in in the long term, because you don't know when the tariff implication is going to hit you. The one thing we know for sure is that the U.S. is front and center, and tariffs are the household name right now, simply because of the pace with which the changes came and…the magnitude of it,' Sharad said.
Yahoo
13-05-2025
- Business
- Yahoo
After major price increases on Shein and Temu, is Amazon Haul the next budget behemoth?
WASHINGTON (DC News Now) — Millions of U.S. shoppers have grown accustomed to scoring budget-friendly deals on Temu and Shein — whether it's the latest fashion, household gadgets or quirky accessories. Now, thanks to a shift in trade policy and the closure of a longstanding tax loophole, those cheap deals could soon become a thing of the past. As of May 2, a change in U.S. tariff law will close the De Minimis exemption — a provision that has allowed shipments under $800 in value to bypass tariffs. President Donald Trump cited concerns about the loophole allegedly being exploited to smuggle drugs into the country. The impact could be significant. A 2023 congressional report revealed that purchases from Shein and Temu accounted for nearly 30% of all items entering the U.S. under the De Minimis rule. Without this exemption, prices for many low-cost imports are expected to rise. 'We found that, on average, prices increased on Shein by about 11% and on Temu by about 33%,' said Kristin McGrath of The Krazy Koupon Lady. 'Certain items nearly doubled in price.' DC Public Libraries holds prom dress, suit giveaway The National Foreign Trade Council estimates that the cost of a $50 order could soon double, leaving shoppers to reconsider where they make their bargain purchases. 'You can't assume that the site that used to be the cheapest — whether for bulk T-shirts, tablecloths, or toys — will still be the cheapest anymore,' McGrath added. With the market shifting, Amazon may finally have its opportunity to make a mark in the discount retail space. After a slow rollout of its budget-focused storefront 'Haul' in 2024, Amazon is now leaning into its domestic supply chains, turning to U.S.-based factories and warehouses to keep prices competitive and avoid incoming tariffs. However, many products on Temu still ship from China and could soon be subject to tariffs, further widening the price gap. As prices shift, experts suggest looking beyond one platform to save. 'There are still ways to make your money go further,' McGrath said. 'Sign up for loyalty programs, use promo codes, or wait for sales events.' Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
02-05-2025
- Business
- Yahoo
DHL Rides Out China-U.S. Turmoil: Supply Chain Shifts ‘Good for Us'
DHL Group's reduced exposure on the trans-Pacific trade lane and a 'disproportionately high market share in non-direct U.S. trade lanes' could keep the logistics giant above water during a U.S.-China trade war that doesn't look like it's slowing down. In its first quarter, DHL increased revenue by 2.8 percent year over year to 20.8 billion euros ($23.6 billion), while consolidated net profit jumped 6.2 percent to 786 million euros ($892.5 million). More from Sourcing Journal Could Changes to Customs Policy Undermine Trump's De Minimis Ban? Tariff Ticker: Administration Ticks Off Textile Sector, Congress to Vote on Trump's Power to Impose Duties Dallas Market Center Launches Campaign Pushing 90-Day Pause on China Tariffs Diversification has been a key for the company amid the volatility. Although DHL CEO Tobias Meyer indicated that Express business-to-consumer (B2C) shipments have been 'notably down' for multiple quarters as the company lowers its percentage of China-to-U.S. flights, the trans-Pacific hit is 'relatively small if you compare it with some of our peers.' Shipments from China and Hong Kong to the U.S. only comprise 8 percent of total volumes via DHL Express. For DHL Global Forwarding, these shipments represent 8 percent of the ocean freight booked, as well as an even smaller 4 percent of air freight. Those figures have historically been 'partially higher,' according to Meyer. According to chief financial officer Melanie Kreis, a decrease in China-to-U.S. volumes likely will not be 'fully compensated' from growth on other trade lanes, 'but it's a very volatile and moving target.' Meyer acknowledged negatives that could harm the business, like the tariffs, with the 10-percent baseline duty imposed by U.S. President Donald Trump 'still four times higher the effective tariff rate that we had before.' He also noted that the 'wait and see' approach of many businesses in April is a cause for concern—exacerbating concerns that DHL Global Forwarding saw EBIT contract a wider-than-expected 23 percent in the first quarter. But the CEO spoke to the benefits of global supply chain reconfigurations like the intra-Asia moves to reposition inventory, or shifts in delivery modes like going from parcelized shipments to bulk transportation. 'We increasingly see customers thinking about this, that they have manufacturing capacity that currently doesn't serve the U.S., but is in a country that we currently expect to be in a favorable position as it relates to tariffs,' said Meyer. 'That production then is used for exports to the U.S. and the local market being served by production capacity in China obviously also needs employment. That element could indeed be quite positive, because it significantly increases logistics cost, it leads to higher complexity and that's in tendency, good for us.' DHL retained its 2025 guidance target of at or above 6 billion euros ($6.8 billion) in operating profit. But the outlook does not cover potential negative or positive impacts of changes in tariff or trade policies. The Germany-based company did not give insight into the percentage of DHL Express packages that fell under the de minimis exemption, which closes for goods out of China on May 2, but according to Kreis, 'we have already reduced our exposure.' 'We do not expect a complete wipeout of the de minimis volume. This volume will, to some extent, find other channels,' said Meyer in the call. 'There will certainly be a decline on the e-commerce side, but we do expect other solutions to also take up a certain amount of volume.' The earnings results came two days after DHL reversed course on its suspension of high-value shipments to U.S. consumers. The about-face occurred after the logistics giant had a 'constructive dialogue' with the U.S. government, which raised the formal entry processing threshold into the country back to $2,500 from $800. 'Clarity is important,' said Ram Ben-Tzion, co-founder and CEO of digital shipment vetting platform of Publican. 'In the negotiation with the government, it's not as if there was some sort of agreement off the books to overlook violations. There was clarity on what is expected, and once there is clarity, an organization like the DHL, FedEx or UPS can plan ahead and prepare and see what capacity will allow them.' With the reversal of the formal threshold, shipments valued between $800 and $2,500 can once again be cleared using the expedited informal entry process. This requires fewer documents and no customs bond, enabling DHL to resume normal operations. U.S.-bound shipments may still experience transit delays as DHL navigates the reintroduction of the service and clears the current backlog of packages. Ben-Tzion told Sourcing Journal that the flood of packages could still trip the company up as the de minimis suspension goes into effect. 'While [the reversal] will allow them to entertain high-value items $800 to $2,500, the probability of them being able to do the same with $20 packages is slim to none,' he warned. Meyer said in the earnings call that he believes U.S. Customs and Border Protection (CBP) is better prepared for the various changes, but 'whether it's efficiently well prepared is a different question.' 'To be honest, there is still a lot to be worked through. It's obviously a time of high workload for [the CBP],' said Meyer. 'This is not only the de minimis exemption. We have seen the shift from informal into formal clearances, and now the exemption there to reinstate the scope of informal clearances. That also covers some of our concern as it relates to de minimis shipments now falling directly into formal clearances. That impact is much more severe.' Sign in to access your portfolio
Yahoo
01-05-2025
- Business
- Yahoo
Tariff Ticker: Congressional Effort to Stop Duties Struck Down, Chamber of Commerce Demands Exemptions
A narrow vote late Wednesday dashed Congress' hopes of reining in President Donald Trump's universal and reciprocal tariff schemes, with a bipartisan bill struck down by a 49-49 margin. Senators Sheldon Whitehouse (D-R.I.) and Mitch McConnell (R-Ken.) were absent from the vote on S.J. Res. 49, which aimed to limit the president's power to impose sweeping 10-percent to 50-percent duties on most U.S. trading partners. Introduced by Senators Rand Paul (R-Ken.) and Ron Wyden (D-Ore.), the bill would have invalidated President Trump's use of the International Emergency Economic Powers Act (IEEPA) as a means of imposing the wide-ranging tariffs. More from Sourcing Journal Could Changes to Customs Policy Undermine Trump's De Minimis Ban? Tariff Ticker: Administration Ticks Off Textile Sector, Congress to Vote on Trump's Power to Impose Duties Dallas Market Center Launches Campaign Pushing 90-Day Pause on China Tariffs Two other GOP lawmakers—Senators Lisa Murkowski (R-Alaska) and Susan Collins (R-Maine)—voted in favor of the bill alongside Paul, its Republican sponsor. McConnell has been vocal about his opposition to the president's trade strategy, with a spokesperson saying, 'The Senator has been consistent in opposing tariffs and that a trade war is not in the best interest of American households and businesses.' While the senator made no public statements about his support for this particular bill, his absence, along with Whitehouse's, frustrated constituents who believe their votes could have spurred the bill's passage. However, it's unlikely that a majority of 'aye' votes in the Senate would have advanced the issue; earlier this month, the House approved a rule allowing it to block a vote on a resolution that would impede the president's authority to impose duties. And the White House has said that President Trump would veto any bill standing in the way of his duty scheme. Following the failed resolution, Paul intimated that more Republicans might yet come out against the tariffs, which have rattled the markets and retail alike. 'Most Republicans are just going along with it, but many of them are quietly still on the other side of this,' the senator said, according to Politico. 'They just aren't willing to say anything yet. But I think if we went through another quarter of negative growth and or another scare in the marketplace, I think there will be more visible voices against the tariffs.' The president, for his part, remains undeterred by the outcry against the tariffs, even from members of his own party. At a cabinet meeting at the White House on Wednesday Trump remarked to reporters that Americans can do without products from China. 'You know, somebody said, 'Oh, the shelves are going to be open.' Well, maybe the children will have two dolls instead of 30 dolls, you know? And maybe the two dolls will cost a couple of bucks more than they would normally,' Trump said. 'But we're not talking about something that we have to go out of our way. They have ships that are loaded up with stuff, much of which, not all of it, but much of which we don't need.' But the U.S. Chamber of Commerce isn't convinced. On Thursday, the largest business advocacy group in the country delivered an open letter to Treasury Secretary Scott Bessent, U.S. Trade Representative Ambassador Jamieson Greer and Commerce Secretary Howard Lutnick pushing for the administration to implement an exclusion process for the forthcoming duties. 'The Chamber requests that the administration take immediate action to save America's small businesses and stave off a recession,' the missive read. The group requested that small businesses be automatically excluded from any new tariffs, as these operations don't have enough margin or capital to pay the new duties or quickly rejigger their supply chains. The Chamber also pushed for automatic exclusions for any products that can't be produced stateside, and for a process that allows businesses to obtain exclusions 'expeditiously' in the event that they can demonstrate that the tariff poses a significant risk to their ability to employ workers. With members of U.S. industry (and reportedly, members of the president's cabinet) wringing their hands over the impact of the tariffs, the Trump administration has repeatedly alluded to discussions with China that might lead to a resolution. But as of Thursday, that hadn't happened; in a morning briefing, China's Foreign Ministry spokesperson, Guo Jiakun, said, 'As far as I know, China and the U.S. are not engaged in any consultation or negotiation on tariffs.'
