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Changes to US postal requirements may cause problems

The changes in de minimis rules in the US are creating complexity and problems for many and the difficulties are continuing to broaden in scope. David Taylor, global commercial director at London-based e-commerce logistics specialists Mark 3 International, pointed out: "In the 12 months since President Trump signed the executive order suspending duty-free de minimis treatment for all countries, the trade environment has become increasingly challenging for exporters." For example, on 1 July the EU introduced a temporary €3 customs duty on low-value parcels imported from outside the EU, mainly through e-commerce. EU member states agreed in December to introduce the customs duty charge per item on parcels valued below €150. And, in late June, in response to the indefinite suspension of the $800 de minimis exemption, US Customs and Border Protection (CBP) introduced new postal informal entry procedures. This new process, known as Entry Type 13, has been established to bring international mail into parity with other American entry modes, Taylor noted. The new rules are intended to meet three goals; "Firstly, to capture duty revenues that were historically exempted; secondly, to use richer data to screen for admissibility and IP [intellectual property]/consumer-protection violations; and finally to disrupt narcotics smuggling that CBP argues is concentrated in the low-data, low-scrutiny postal channel." The so-called 'interim final rule' came into effect on 24 July and is expected to present a series of challenges for UK exporters amongst others. Postal entries into the US that previously only attracted the 10% Section 122 duty are now subject to all applicable duties. Moreover, while the International Mail Duty Worksheet (IMDW) continues to be used for the moment, there are enhanced data requirements and new levels of complexity are being added. The IMDW is used by carriers and mail operators to declare and pay import duties on international postal packages. It must be submitted monthly to CBP along with duty collections. Taylor observed: "While the IMDW process remains in place for now, businesses need to prepare for more detailed compliance requirements. "Logistics customers are already experiencing greater costs, worsening service, and greater uncertainty, and this will almost certainly impact importers, and the end consumers. "Compounding this is the fact that many of the larger carries and postal companies are still poorly equipped to deal with such a seismic change." He noted that according to a recently published factsheet from the UK Government, there has been a decrease of 10.3% (£6.8bn) in UK exports of goods to the US over the last year. Taylor concluded: "While UK exports of services have risen in recent months, the exporting of goods to the US has already declined sharply. "The changes which the industry is going to experience in the next three months - and possibly longer - will make this process even more difficult. "As a result, it's vital that British exporters find trusted partners who can best navigate these complex and evolving changes in the market. By doing so, they reduce the burden on importers and ultimately improve their commercial competitiveness."

Demand still outpacing capacity as AI traffic bolsters air cargo market

Global air cargo demand strengthened again last month, as Middle Eastern hub operations began recovering from the recent geopolitical disruption - although capacity growth continued to lag demand, reinforcing a tighter market and preserving pricing power for airlines. According to the latest IATA data, industry-wide cargo tonne km (CTK) rose 8.5% year on year in June, while international cargo traffic increased 9.6%. North American carriers led the growth overall, but the sharpest improvement came from Middle Eastern airlines, whose international traffic was up 5.6% year on year, as transfer traffic gradually resumed through regional hubs. However, IATA noted that recovery remained uneven, and Europe-Middle East traffic contracted 41.1% year on year, while Middle East-Asia volumes also remained in decline. Demand was largely driven by "urgent inventory movements of AI and semiconductor cargo" - Asia-North America traffic, the largest air cargo corridor, grew 14.7%, extending its run of monthly growth. Those findings mirror observations from Xeneta, whose air freight specialists said during a recent webinar that demand linked to AI infrastructure continued to support elevated freight markets. "The crisis is not over, and it's also buoyed by the great demand for AI shipments - we're talking server equipment, everything that you need in the AI boom the world is experiencing right now," said the intelligence platform. While demand accelerated, IATA data showed available cargo tonne km (ACTK) increased only 4.4%, lifting the industry's cargo load factor by 1.8 percentage points, to 46.9%. This tighter supply-demand balance has shifted negotiating leverage from shippers, with Xeneta warning that as market conditions tightened, shippers with aggressively priced long-term contracts may struggle to secure the same service levels. For forwarders, the challenge is amplified by greater reliance on spot purchasing. Xeneta said higher spot market participation made it increasingly difficult to support fixed-price annual contracts. "We've seen over time that when the airline spot share rises above 40% to 50%, then it becomes not just significant pressure for the forwarder to move and buy their cargo, but also to align their contracts with their customers," said Xeneta. Matthew Gore, partner at law firm HFW, told The Loadstar most of the shipper-freight forwarder air freight agreements he'd overseen typically had a quarterly rather than annual validity. "Some also have a master framework/service order (call-off) structure allowing shippers to contract for different periods at different times, and for different lanes, etc," he explained. Mark Chadwick, president of the Global Shipper's Association, suggested air freight contracts could benefit from a similar mechanism to index-linking, but with an index that "indicates a trend at which you trigger a discussion". He explained: "Like we saw with the China outbound in the ecommerce peak. All of the indices showed rates through the roof; that gave us the kind of openness to have a conversation to talk about that price. "Using it as a trend is a trigger rather than a lockout, so if it goes up 10%, your rates go up 10%," Mr Chadwick told The Loadstar. Although air cargo yields eased 1.2% month on month in June - the first sequential decline after two months of increases - IATA noted that yields remained 34% higher than a year ago, while jet fuel prices were still nearly 46% higher. The association said the recent fall in yields should be viewed as 'easing from a short-term peak' rather than a return to normal pricing conditions, with aircraft continuing to fill faster than airlines can add capacity.

Gulf landbridge not a sustainable solution, says K+N CEO

Kuehne+Nagel (K+N) appears less convinced than its peers of the long-term prospects for the Gulf landbridge, which has emerged in the wake of the US/Israeli war against Iran, despite growing belief among other operators that it is here to stay. At the start of July, CEO of the Swiss multinational Stefan Paul told the UK Financial Times that, given the "sheer mass" of regional boxship activity prior to the war, and the effective closure of the Strait of Hormuz, "a trucking solution can never be sustainable". Mr Paul's comments came at a brief reprieve in the conflict and hot on the heels of several forwarders and transport operators telling The Loadstar they thought the landbridge offered "long-term viability" in a region that for three years had proved unstable. Asked if the re-escalation of the conflict had changed Kuehne+Nagel's way of thinking about the landbridge, a spokesperson stressed that while the company believed its long-term prospects were limited, and K+N was offering such a service. "Kuehne+Nagel is operating air-road solutions via airports in Saudi Arabia, Dubai, and Oman with cross-border trucking into Middle East countries," a spokesperson told The Loadstar. "This solution is an alternative gateway into the Middle East countries. Should the situation change, we will evaluate with our customers what the best solution is to keep their cargo moving." Together with the sheer capacity available via ocean freight, it appears part of the problem for operators like K+N is that the region's infrastructure limits the volumes that can be handled by the landbridge. Shortfalls in rail and road infrastructure, not suitably equipped to offset even a fraction of the volumes that are moved each week by box ships, is where the concern lies, but sources said cooperation between Gulf states suggested this could be addressed. One haulier source in Saudi Arabia noted that the governments had been swift in ensuring that trucks could transit borders without the usual level of checks. As a result, Saudi Arabia, in particular, experienced a boom in its logistics activities, which has led many to believe that the government is looking for ways to "normalise" the landbridge. One source agreed with K+N to an extent, telling The Loadstar they did not expect to see "full normalisation" of the route, but also believed it had proved itself a viable alternative for those shippers acutely sensitive to disruption. Among those to see a long-term future for the landbridge route, Saudi Automobile & Touring Association's executive manager, Hasan Almanasif, pointed out that one need only consider how the Houthi siege of the Red Sea had reordered sea freight routings. "Bab el Mandab is partially open again and yet the alternative routings developed to get around the trouble there continue to be used, and it is because of this that I believe the Hormuz crisis will see these new routings maintained. "And I think that can only be a good thing. The new routes need to be used. But the issue now is ensuring there is the capacity to provide a balance between supply and demand to address the imbalance, with pricing very, very high at the moment."