Freight and Logistics News and Market Update

Air

• The US and China agreed to reduce reciprocal tariffs to 10% for a 90-day negotiation period, reversing prior rates that reached up to 145% from the US and 125% from China. The temporary deal excludes key sectors like autos, pharmaceuticals, steel, semiconductors and aluminum. A 20% tariff on Chinese imports tied to fentanyl remains. The agreement boosted market confidence, with the S&P 500 rising 3.1% and major companies like Amazon and Tesla seeing gains.
• The United States has announced a reduction in the "de minimis" tariff on low-value shipments from China, lowering it from 120% to 54%, effective May 14, 2025. This change, part of a broader effort to ease trade tensions between the US and China, maintains the $100 flat fee per package, shelving a previously proposed $200 charge. The de minimis rule allows items valued under $800 to bypass standard tariffs and inspections, a provision that has benefited Chinese eCommerce firms like Shein and Temu. While the revised 54% rate still presents a significant cost, the pause provides retailers time to adjust operations.
• Following a 90-day trade truce between the US and China, China has ended its freeze on Boeing aircraft deliveries. Boeing plans to deliver about 50 jets to Chinese customers this year, including previously built 737 MAX jets and 777 freighters. The move signals improving trade relations, though the outlook remains uncertain beyond the temporary deal.

Ocean

• Amid the temporary pause in US-China tariff hikes, shippers are still exploring Foreign Trade Zones (FTZs) as a long term strategy to manage costs and delay duties. FTZ inquiries have surged over 500 percent since April, though many companies lack the infrastructure to implement them. While FTZs do not eliminate tariffs, they offer strategic flexibility through manufacturing and reclassification that could help mitigate future trade disruptions if the truce expires without a lasting deal.
  Read more about Foreign Trade Zones
  Contact UPS Zone Solutions
• US imports are projected to decline 13 percent year over year in May, marking the first drop in 19 months as 145 percent tariffs take effect. While a temporary tariff truce is now in place, the economic impact of earlier announcements is already driving retailers, especially smaller ones, to delay or cancel orders. The National Retail Federation expects continued declines through September, with monthly import volumes falling over 20 percent compared to 2024. In response, ocean carriers are suspending services and reducing sailings to manage capacity.
• Carriers such as Wallenius Wilhelmsen and Höegh Autoliners will face new US voyage fees starting October 16, with a $150-per-vehicle charge adding up to $1–1.35 million per voyage. They are in talks with US authorities and preparing to pass these costs on to customers. Despite the added fees, carriers report strong Q1 profits and full bookings, though demand for high-and-heavy cargo remains soft.

Air

• LATAM Airlines has announced the addition of seven new international routes from Argentina to Chile, Brazil, Peru and the US. The expansion strengthens regional connectivity and provides new access points to international destinations through LATAM’s existing hub network, including key connections in Brazil.
• LATAM Cargo transported over 25,000 tons of flowers from Colombia and Ecuador during the 21-day Mother's Day season, marking a 4% year-over-year increase. To meet heightened demand, the airline increased flight frequencies by 48%, operating more than 430 departures to key markets in the US and Europe. This performance underscores LATAM's leadership in the floriculture logistics sector.

Ocean

• The number of vessels transiting the Panama Canal rose to an average of 34 per day in April, totaling 1,021 for the month. Although still below the current daily maximum of 36 vessels, traffic continues to recover. Transit fees in 2025 are 15% lower than the previous year.
• DP World has announced a $760 million investment to expand the Port of Caucedo in the Dominican Republic. The project will increase the port's capacity by 24% and enlarge its Free Trade Zone (FTZ), aiming to position Caucedo as a primary logistics hub in the Caribbean. The investment includes enhancements to accommodate larger vessels and the development of additional infrastructure to support increased trade activity.

Air

• The US has ended its de minimis exemption for packages under $800 from China and Hong Kong, which previously allowed duty-free entry with minimal customs checks. The change, effective May 2, has led to a sharp drop in eCommerce air cargo volumes, canceled freighter flights and price hikes from platforms like Shein and Temu. Industry experts warn of significant disruption across global trade lanes and increased administrative burdens for forwarders. While tariffs on many Chinese goods are temporarily paused, the end of the de minimis exemption remains in effect and continues to disrupt eCommerce logistics.
• China has added 75 international air cargo routes in the first four months of 2025, with nearly 90 percent connecting to Asia and Europe. This expansion supports growing cross-border eCommerce and trade in goods like electronics and fresh produce, reflecting a strategic pivot toward non-US markets to strengthen China's role in global supply chains.
• In March 2025, Asia Pacific airlines experienced a 5.7% year-over-year increase in air cargo demand, driven by a surge in shipments ahead of anticipated US tariffs. For the first quarter, cargo demand grew by 5%, continuing the momentum from 2024. However, the Association of Asia Pacific Airlines (AAPA) cautions that ongoing US tariff uncertainty, supply chain disruptions and rising operational costs may dampen future growth.

Ocean

• A surge in China–US container bookings is anticipated following the 90-day tariff truce, straining limited ocean capacity and causing space shortages. With over 30 percent of trans-Pacific capacity recently blanked and vessels redeployed, carriers may struggle to restore service levels. Forwarders caution about rising spot rates, premium surcharges, equipment imbalances and potential port congestion, mirroring conditions from the 2020 surge.
• Mediterranean Shipping Co. (MSC) has suspended its Empire and Pelican services from China to the US East and Gulf coasts due to a sharp drop in demand following the 145% US tariff on Chinese goods. Volumes from China have fallen by 30%, prompting MSC to revamp four other services to enhance Southeast Asia coverage. Although tariffs are currently paused under a 90-day truce, earlier impacts have already triggered service changes and volume declines that may take time to recover. These adjustments reflect broader capacity cuts as carriers respond to shifting trade flows.

Air

• The US and UK have announced a new trade deal that cuts tariffs on UK exports of cars, steel and aluminum, and removes a 20 percent tariff on British beef. The agreement also exempts Rolls-Royce engines and aircraft parts from US tariffs. UK car exports to the US, which reached 9 billion pounds in 2024, remain the country's top export.
• International Airlines Group has ordered 71 new aircraft, including 31 Airbus A320neo family jets, 29 Boeing 787-9s and 15 Airbus A350-900s. Deliveries will begin in 2027 and continue through 2033. The aircraft will be distributed across British Airways, Iberia and Aer Lingus to replace aging models and expand the fleet.

Air

• Saudia Cargo and China Henan Aviation have signed a Memorandum of Understanding to launch new cargo services, including route development and freighter flights between Zhengzhou and Riyadh. The partnership aims to establish both cities as regional hubs connecting APAC and EMEA through bonded logistics zones, improving trade flow and transit efficiency.
• India’s growing outbound volume attracts the emerging and exiting global forwarders to expand their network through multimillion investments. Challenge Group has expanded its presence in India by launching a new weekly B767-300 freighter service to Bengaluru, effective May 4, with a capacity of 50 metric tons. This addition complements its existing thrice-weekly flights to Mumbai and caters to sectors including pharmaceuticals, high-tech and temperature-sensitive products.

Ocean

• COSCO SHIPPING Lines has established its presence in Saudi Arabia. The establishment of this new company marks a significant step in COSCO SHIPPING's expansion of its global footprint. With Saudi Arabia being a key market and one of China’s top trading partners, the move strengthens COSCO SHIPPING’s presence in the Middle East.

• The US government has launched a new process that may expand Section 232 tariffs to cover additional steel and aluminum-based products. Beginning May 1, 2025, the Bureau of Industry and Security began accepting industry requests, which are evaluated based on national security, material content and import trends. Approved products would be subject to tariffs shortly after announcement. Although the initial request window opened in early May, the process is ongoing and signals a broader shift in how Section 232 tariffs could expand moving forward.
• The US and UK have outlined a preliminary trade agreement aimed at deepening economic ties and supporting fair, reciprocal trade. While tariffs on UK steel, aluminum and autos remain for now, the two countries are negotiating preferential arrangements. The agreement includes plans to streamline customs procedures, expand US market access in agriculture, aerospace and pharmaceuticals, and begin talks on a digital trade deal. The UK will also implement a new quota allowing duty-free US ethanol imports. Further negotiations are expected.
• US President Trump issued an executive order on April 29 to end the compounding of certain import tariffs on the same goods. If a product is subject to overlapping measures—such as Section 232 tariffs or those imposed under the International Emergency Economic Powers Act—only one will apply. The change is retroactive to March 4, with standard refund procedures in place, and updates to the US Harmonized Tariff Schedule are required by May 16.
• As of May 3, US President Trump’s measures to ease the impact of the 25 percent Section 232 tariffs on imported auto parts are now in effect. While the tariffs apply broadly, USMCA-covered parts (excluding knock-down kits) are temporarily exempt. US auto manufacturers may now apply for offsets based on the value of vehicles assembled domestically, at 3.75 percent for the first year and 2.5 percent for the second. Only US-assembled vehicles qualify, and offsets may only be used by authorized importers. The Commerce Department and CBP are overseeing the process, with penalties for misuse.
• The US and China have signed a new trade agreement that pauses and reduces tariffs and strengthens intellectual property protections. The deal promotes fairer trade, improves safeguards for business data and reduces uncertainty for companies shipping between the two countries, offering more stability for global supply chains.

• Foreign investors are increasing their investments in Singapore's logistics sector as shifting global trade flows and supply chain realignments boost demand for agile, well-connected hubs. Recent developments include DP World's new bonded warehouse and ESR Group’s massive Sunview Logistics & Container Hub, backed by a consortium of Japanese investors. Singapore's strong connectivity, strategic location and focus on innovation and sustainability make it a key logistics hub in the Asia-Pacific region.