Farewell to De Minimis: A New Era in E-Commerce Logistics
What's Next for Cross-Border Shopping Without Duty-Free?
The suspension of the de minimis exemption has thrown the business models of Chinese e-commerce giants like Temu and Shein into disarray. Once reliant on T86 customs clearance to ship low-value goods duty-free, these platforms now face soaring 54% tariffs, forcing a swift pivot to T11—a costly and complex alternative.
Will this shift allow them to maintain their dominance, or will rising costs drive consumers away? How will the logistics industry absorb the shock of this massive policy change? And could this mark the end of duty-free cross-border shopping as we know it?
This article explores the critical questions facing the industry in the wake of this seismic shift.
The Transformation of China's Cross-Border Logistics
The battle for cost and speed in cross-border e-commerce logistics is always firece. As Chinese giants like Shein and Temu drive global demand, logistics models are evolving.
Small-parcel logistics centers on two key models: direct shipping and overseas warehouses. Direct shipping breaks down into three main types:
Postal Small Packets: Delivered via national postal systems, these low-cost options take over 10 days and offer basic service with broad reach—but limited speed and tracking.
International Express: Services like FedEx, UPS, and DHL deliver in 2–4 days with full tracking and reliability—at a premium price.
Dedicated Cross-Border Lines: Offering end-to-end service in 3–10 days, these lines strike a balance between cost, speed, and visibility—often the most efficient choice for e-commerce.
In the early days of cross-border e-commerce, low-value, lightweight goods dominated, and postal small packets were the default shipping method. That edge began to fade in 2016 when the Universal Postal Union (UPU) raised terminal fees, pushing up costs.
Logistics firms responded with faster, trackable dedicated lines. The shift accelerated in 2018 when the U.S. moved to exit the UPU, further eroding the postal packet advantage.
As postal rates rose and express shipping remained costly, dedicated cross-border lines quickly gained traction. By combining air freight with duty-free, low-value goods, they cut costs and streamlined delivery.
Postal packets once held over half the direct shipping market from 2016 to 2020, according to Guosen Securities, but their share has steadily declined over the years. Dedicated lines grew from 6% in 2016 to 40% by 2022, while express services dropped from 40% to 10% due to high prices.
By 2025, small parcels sent via dedicated lines are projected to reach a 56% share, with market size hitting RMB 164.9 billion (about $22.98 billion) and annual growth of over 20%.
Shipments using the U.S. de minimis duty exemption have surged from 134 million in 2015 to over 3.6 billion in 2024, according to U.S. Customs and Border Protection. More than half came from China, with Temu and Shein accounting for over 30% of the total.
Temu runs a lean direct-shipping model, pairing centralized warehouses in China with dedicated parcel lines. It works with more than 20 logistics partners. In early 2023, J&T Express handled over half of its volume, but that share fell below 10% as shipments and partners scaled up. For last-mile delivery in the U.S., Temu taps carriers like UPS, USPS, FedEx, and DHL.
The $800 Question
T86, a customs clearance mechanism created by U.S. Customs for low-value imports under $800, once served as a lifeline for cross-border e-commerce platforms targeting B2C customers. By requiring minimal paperwork—listing only item details and values—it supported both air and sea freight, enabling fast and low-cost clearance.
However, the end of de minimis exemption has significantly reduced its appeal. USPS shipments now face a 54% tariff or $100 per package, while express carriers like UPS and FedEx offer slightly better rates at around 30%.
Currently, the new postal rules apply exclusively to parcels sent via China Post and Hongkong Post, creating a loophole for shipments routed through third-country postal services, where origin disclosure isn’t required for low-value imports. But this workaround is unlikely to last. Longer transit times, higher costs, and rising scrutiny from U.S. Customs make it unsustainable. A surge in rerouted shipments could prompt regulatory action to close the gap entirely.
The shift toward general trade clearance models such as T11 and T01 is seen as a more viable alternative. These methods involve registering as a legal importer, submitting detailed documentation, paying duties, and complying with U.S. regulations. Though complex, they provide smoother clearance and stricter risk controls—key for companies managing global supply chains. For example, Apple imports its iPhones and iPads using T01.
Under T11 clearance, logistics providers often consolidate dozens of small packages into a single declaration for efficiency. However, the entire shipment is taxed on its declared value, and mixed product types increase the risk of customs inspections.
Insiders point to a broader shift on the horizon. The U.S. Department of Commerce is developing a global regulatory framework for low-value parcels, expected to launch as early as September 2025. This system aims to unify declaration and oversight processes, with additional details set to be finalized by U.S. Customs soon.
What's Next?
The removal of the de minimis exemption has upended the economics of cross-border e-commerce, forcing platforms like Temu and Shein to rethink their logistics strategies. Customs clearance is now slower and more expensive, with tariffs driving up costs and contributing to declining order volumes.
While demand for overseas warehouses is surging, this solution is not without risks. Inventory turnover remains slow, raising the specter of overstocking. Sellers may face difficult decisions: clear excess goods at a loss or scrap them entirely. According to China Securities, U.S.-China air freight is projected to drop by over 20% by 2025, while overseas warehouse orders could grow by 8%.
The cost pressures extend to postal parcels, which now face a 54% tariff per package. This has significant implications for low-value goods, where supply chain costs have risen by over 20%. Categories like apparel and electronics are particularly hard-hit, with costs increasing by at least 50%.
However, retail markups offer some relief. Duties are calculated based on FOB value, which is often several times lower than retail prices. Items declared at $7 FOB, for example, may retail for $30 or more, leaving room to absorb tariffs without heavily affecting margins.
Soochow Securities highlights that products with a 5x markup could handle a 145% tariff with a modest 29% retail price increase.
Platforms are responding with new strategies. Temu is onboarding sellers with inventory pre-stocked in U.S. warehouses, enabling faster delivery times. By late 2024, 20% of Temu’s U.S. orders were fulfilled locally, and the platform has also increased its reliance on ocean freight, particularly for bulk shipments.
Meanwhile, Shein remains committed to air freight, prioritizing speed over cost efficiency to maintain its fast-fashion model. Despite expanding its logistics hubs in the U.S., Shein continues to fly thousands of items directly from China each week. To mitigate rising tariffs, Shein is diversifying its supply chain, adding suppliers in Turkey and Brazil and building a massive warehouse in Vietnam, expected to become a key export hub.
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