Page 16 - STAT Trade Times Novemmber 2024 Magazine for Website

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Lossing adds: "We do see companies "We know other countries with higher
evaluating air freight when rates rise. Large import duties or taxes still have a significant
shippers often build supply chains with air growth in cross-border e-commerce. But we
because of air cargo’s unique value proposi- are very close to the U.S. elections, and those
tion - this is dependent on value, speed, risk proposals could change - either way- there
of obsolescence, inventory carrying costs, is a new administration coming in Janu-
cash flows of the business and speed to mar- ary - and most of what was proposed is not
ket. When the price moves in a significant through Congress but through Executive
way, that formula changes. For companies Action. So, we need to understand what
that have a high borrowing cost for cash and Congress might do to further strengthen the
don’t want to stock up on inventory for small proposed changes.
but high value goods, that formula may not There is also a B2B "However, my firm's forecast is that it will cut
change. But for others, it will deflate air cargo China to U.S. e-commerce air freight demand
demand and push back to the ocean.” element that is driving between 5-23 percent. That’s significant,
Story to continue in 2025 and air freight demand given the prevalence of e-commerce as a
percentage of total demand. There is also a
beyond... as well - with the B2B element that is driving air freight demand
Podgorski says it is hard to tell if this wave will as well - with the prevalence of Amazon FBA
continue, as is. "There is tremendous regula- prevalence of Amazon and penalties for stock outs for FBA vendors.
tory scrutiny, trade tensions and sustainability FBA and penalties When you talk to China sellers using air freight
and environmental criticism of companies to inject into Amazon’s regional distribution
like Shein and Temu. However, this is not for stock outs for FBA network - often this isn’t driven by clearance
the first time we have seen an e-commerce savings - but speed and risk of de-prioritisation
boom, nor will it be the last. As long as vendors. on the website. So we are forecasting this
goods can be produced and sold quickly and Derek Lossing piece of B2B e-commerce demand will stay
cheaply, there will be a global market for it. E- Cirrus Global Advisors pretty robust based on seller surveys in China."
commerce will no doubt become cyclical like
the rest of the air cargo industry but it is here Another key takeaway from the Rotate What next for e-commerce and
to stay. Many projected that e-commerce survey - lowering of de minimis thresholds air cargo?
would regress post-Covid but all signs point ($800 in the U.S.) may have limited im- To meet the growing demand in e-com-
otherwise. And in a region where both ocean pact with only 17 percent expecting large merce logistics, Cathay Cargo is extending its
and air capacity is already very tight, the declines in volumes in case U.S. and Europe capabilities with solutions like Cathay Cou-
slightest change in one or the other can have tighten regulations. rier, designed for high-priority door to door
immense knock-on effects." As consumer demand for quick deliveries small package e-commerce shipments. “This
The plans by the U.S. government to continues, Cathay Cargo anticipates that e- service offers speed and reliability, providing
prevent Chinese e-commerce giants from commerce growth will persist into 2025 and direct, seamless connections across air and
exploiting a loophole in import regulations beyond, driven by increasing online shop- multi-modal routes,” says Owen. “In addition,
"will not put the genie back in the bottle," ping and further digitalisation in the logistics we are enhancing intermodal sea-air trans-
says Xeneta. The Biden administration is space, says Owen. "We are also closely moni- portation, facilitating shipments between
moving to curb low-value shipments enter- toring the evolving regulatory landscape in Hong Kong and other regions.
ing the U.S. duty-free under the $800 de the USA and Europe as these regions play “Our integrated approach includes direct
minimis threshold, which it says has been key roles in shaping e-commerce logistics. multi-modal links for upstream cargo accept-
abused by Chinese e-commerce platforms "Despite regulatory developments, we ance in Dongguan, where flight-ready ex-
such as Shein and Temu. fundamentally believe that the new model ports are consolidated and sent directly to/
“Shein and Temu were not set up to expose of consumer consumption behaviours will from Hong Kong International Airport (HKIA).
a loophole in de minimis regulations," says continue to benefit the air cargo industry, This allows us to optimise competitive rates,
Niall van de Wouw, Chief Airfreight Officer, creating sustained demand for efficient and combined with Hong Kong’s efficient air
Xeneta. "The cornerstone of the e-commerce reliable shipping solutions." cargo network.
business model is the massive and seemingly The key here is what happens with Sec- “By offering an alternative gateway for e-
insatiable consumer demand in the West for tion 321 clearance into the U.S., says Lossing. commerce shippers in the Greater Bay Area,
low-cost fast-fashion, apparel and textiles. "There is still a lack of clarity on how the new we enhance flexibility, improve lead times,
"More than a billion shipments now enter rules will be enforced, and we have been and support the diverse needs of global e-
the U.S. under de minimis exemption each modeling for clients likely scenarios based commerce players, keeping them competi-
year with the majority originating from Chi- on what we do know. The question is will the tive in a fast-moving market.”
nese e-commerce platforms. This extraordi- scope be limited to goods subject to the 301 UPS customers will experience a short-
nary level of demand is not going away and Tariffs? And more importantly, what is the ened shipping (and shopping) season this
the genie cannot be put back in the bottle.” timeline for these changes? year, with four fewer shipping days between
14 | NOVEMBER 2024 www.stattimes.com