Supply chain constraints have begun as a result of companies wishing to avoid US-implemented tariffs. Germany-based DHL has suspended all business-to-consumer (B2C) shipments exceeding $800. The logistics company cited “multi-day transit delays” as its main reason for ceasing services. Business-to-business shipments are expected to experience delays, and packages valued below $800 will remain unaffected.
DHL is one of many carriers that are refusing to accept higher export costs. Hong Kong Post suspended all sea freight shipments to the US. Air freight shipments will halt on April 27, excluding documents. “The US is unreasonable, bullying and imposing tariffs abusively,” the Hong Kong government said in the statement. “The public in Hong Kong should be prepared to pay exorbitant and unreasonable fees due to the US’s unreasonable and bullying acts.” Businesses must now use private couriers to deliver packages, ensuring a rise in costs for consumers.
FedEx told CNN it’s “business as usual” and will continue its international courier service. FedEx experienced a significant revenue decline in FY2024, with a decline of $87.69 billion, with the cost of revenue dropping $68.74 billion. FedEx announced a 5.9% rate hike for US package and freight services in January before tariffs were announced.
UPS will also continue services, but again, expect shipping costs to rise. The company has provided numerous resources to businesses that wish to reroute their shipments or adjust inventory to avoid tariffs. The company stated it will aim to minimize disruptions during this trade war, but anyone who has dealt with customs knows that the government is in no rush to assist businesses expediting shipments.
The US Customs and Border Protection (CBP), beginning on May 2, will require all shipments from China to undergo full entry documentation and duty payments regardless of value. Postal shipments will cost a $25 to $50 fee per parcel or 30% tariff if duties are not pre-paid. Customs will review the original country of origin documentation to ensure that transshipped goods through third nations are taxed. Goods coming from Foreign Trade Zones (FTZs) will be able to avoid these fees. This is not an option for many small businesses or drop shipping companies seeking to sell to Americans. Nearshoring is also rising in popularity with sellers aiming to lower shipping costs by going through Mexico.
Expect documentation bottlenecks at customs as everyone adjusts to new regulations. There was a customs gridlock during the February de minimis pause this year, with millions of parcels overwhelming the system. Many expect this to happen once more as there will be a rush of orders before May 2.
