New US regulations not to put e-com 'genie back in the bottle': Xeneta

The US administration is moving to curb low-value shipments entering the US duty-free under the $800 de minimis threshold, which it says has been abused by Chinese e-commerce platforms.

“Shein and Temu were not set up to expose a loophole in de minimis regulations. The cornerstone of the e-commerce business model is the massive and seemingly insatiable consumer demand in the West for low-cost fast-fashion, apparel and textiles,” said Niall van de Wouw, chief airfreight officer at Xeneta, in a company release.

“More than a billion shipments now enter the US under de minimis exemption each year, with the majority originating from Chinese e-commerce platforms. This extraordinary level of demand is not going away and the genie cannot be put back in the bottle,” he noted.

Xeneta’s latest air cargo market analysis highlighted a 30-per cent annual rise in e-commerce demand ex-China as well as 37 million new downloads of the TEMU app alone in a single month this summer.

There is no clear timeline for the introduction of the new de minimis regulations and van de Wouw believes the Chinese e-commerce businesses will be able to adapt quickly.

“Companies like Shein and Temu have known for a long time that changes to US import regulations are inevitable, and I don’t think they will be overly concerned by the latest announcement,” he said.

“Even if the new de minimis regulations cause prices to rise slightly on e-commerce platforms, they will still be very low cost. The US government is trying to level the playing field for American retailers and manufacturers, but the price differential is so big that they aren’t even playing on the same field as Chinese e-commerce,” he observed.

The US government also stated the growing volume of de minimis shipments makes it difficult to target and block illegal or unsafe goods. “The US government has existing regulations at its disposal to stop illegal goods entering the country, they just need to enforce them,” Van de Wouw added.

Most e-commerce goods are shipped from Asia to the United States by air, with the massive growth in volumes this year squeezing available capacity and causing markets to spike, the Xeneta release said.

Data from Xeneta shows the air cargo spot rate from China to the United States in the week ending September 8 was up by 30 per cent year on year at $4.53 per kg.

Van de Wouw cautioned that the air freight market is set for an extremely challenging year-end peak season when volumes traditionally increase in the run up to Christmas and New Year.

Fibre2Fashion News Desk (DS)