US plans next month to cancel tariff-free access for low-value parcel shipments from China and Hong Kong, coupled with a new 145 per cent tariff rate on Chinese imports, could bleed more than US$22 billion in revenue from the air cargo sector over three years.
They could also put thousands of online sellers with direct-to-consumer fulfilment models out of business, according to an e-commerce and logistics consulting firm, reports New York's FreightWaves.
Derek Lossing, the founder of Cirrus Global Advisors, has previously said the Trump administration's recent trade actions against China would 'decimate' air cargo out of China because demand for products on the Temu and Shein platforms would plummet.
His Seattle-based consultancy has now quantified the downstream effects of the changes on the air cargo sector.
The Cirrus Global Advisors model shows the airfreight industry revenue could contract $22 billion if the White House maintains tariffs at 125 per cent for a substantial period of time, based on assumptions about lower consumer demand, excess airline capacity and downward pressure on yields.
Large cargo airlines and freighter forwarders, like Atlas Air and Kuehne+Nagel subsidiary Apex Logistics, with heavy exposure to large Chinese marketplaces, as well as Amazon and smaller online brands, are expected to experience downward pressure on revenues, Mr Losing said in a phone interview.
The estimate was made before the US clarified that China tariff rate was actually 145 per cent, to include a previous tariff, but it's unclear if the higher rate would further drag down industry revenue.
E-commerce shipments account for an estimated 50 to 60 per cent of China-US air volumes and an estimated 20 per cent of global air cargo volumes, according to logistics providers and the International Air Transport Association.
Experts agree that dozens of widebody freighters are dedicated to hauling e-commerce shipments across the Pacific each day from China, but Mr Lossing said he believes an estimate of 100 such aircraft by Netherlands-based consultant Rotate is high.
Total air cargo revenue on the China-US trade lane will decrease more than 30 per cent because of the lower volumes caused by the new US trade policies and the lower yields that will follow, Mr Lossing, a former Amazon logistics executive, predicted.
Limiting de minimis when tariffs were relatively low was mostly considered an inconvenience for large Chinese marketplaces like Temu, Shein and Alibaba because their prices are so low consumers likely wouldn't change their shopping habits if a piece of clothing increased in price by $2 or $3.
But the imposition of 145 per cent tariffs has blown up the model of fulfiling orders in China and shipping them by air directly to the customer's residence, which was cheaper and faster than shipping in bulk by ocean to a US warehouse for pick, pack and delivery.
And If the European Commission follows through on intentions to remove the de minimis exemption for goods valued below $170 and impose a customs handling fee on individual B2C packages the harm to cross-border e-commerce players, including all-cargo airlines, could be severe, Mr Losing told FreightWaves.
'That's kind of the one-two punch that actually would potentially push the revenue loss for air cargo over our current estimate,' he said.
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They could also put thousands of online sellers with direct-to-consumer fulfilment models out of business, according to an e-commerce and logistics consulting firm, reports New York's FreightWaves.
Derek Lossing, the founder of Cirrus Global Advisors, has previously said the Trump administration's recent trade actions against China would 'decimate' air cargo out of China because demand for products on the Temu and Shein platforms would plummet.
His Seattle-based consultancy has now quantified the downstream effects of the changes on the air cargo sector.
The Cirrus Global Advisors model shows the airfreight industry revenue could contract $22 billion if the White House maintains tariffs at 125 per cent for a substantial period of time, based on assumptions about lower consumer demand, excess airline capacity and downward pressure on yields.
Large cargo airlines and freighter forwarders, like Atlas Air and Kuehne+Nagel subsidiary Apex Logistics, with heavy exposure to large Chinese marketplaces, as well as Amazon and smaller online brands, are expected to experience downward pressure on revenues, Mr Losing said in a phone interview.
The estimate was made before the US clarified that China tariff rate was actually 145 per cent, to include a previous tariff, but it's unclear if the higher rate would further drag down industry revenue.
E-commerce shipments account for an estimated 50 to 60 per cent of China-US air volumes and an estimated 20 per cent of global air cargo volumes, according to logistics providers and the International Air Transport Association.
Experts agree that dozens of widebody freighters are dedicated to hauling e-commerce shipments across the Pacific each day from China, but Mr Lossing said he believes an estimate of 100 such aircraft by Netherlands-based consultant Rotate is high.
Total air cargo revenue on the China-US trade lane will decrease more than 30 per cent because of the lower volumes caused by the new US trade policies and the lower yields that will follow, Mr Lossing, a former Amazon logistics executive, predicted.
Limiting de minimis when tariffs were relatively low was mostly considered an inconvenience for large Chinese marketplaces like Temu, Shein and Alibaba because their prices are so low consumers likely wouldn't change their shopping habits if a piece of clothing increased in price by $2 or $3.
But the imposition of 145 per cent tariffs has blown up the model of fulfiling orders in China and shipping them by air directly to the customer's residence, which was cheaper and faster than shipping in bulk by ocean to a US warehouse for pick, pack and delivery.
And If the European Commission follows through on intentions to remove the de minimis exemption for goods valued below $170 and impose a customs handling fee on individual B2C packages the harm to cross-border e-commerce players, including all-cargo airlines, could be severe, Mr Losing told FreightWaves.
'That's kind of the one-two punch that actually would potentially push the revenue loss for air cargo over our current estimate,' he said.
SeaNews Turkey
