Starlux Airlines' Response to U.S. Ending Duty-Free Status for Chinese Imports: Monitoring a 90-Day Cargo Shipping Surge

The United States will cancel the duty-free policy for small air packages for imported goods from China on May 2, 2025, leading to fluctuations in the global air cargo market. According to Liu Yunfu, Chief Strategy Officer of Starlux Airlines, despite a "90-day shipping surge," shippers have not shown increased willingness to ship, indicating uncertainty in the market about the policy. Starlux Airlines offers slightly lower freight rates on North American routes compared to its competitors due to its different product mix and cargo size structure. This policy change presents a challenge for e-commerce platforms' small air package business.

Starlux Airlines: Tariff Changes to Significantly Impact Small Parcel Air Transport

Starlux Airlines' Chief Strategy Officer, Liu Yunfu, stated in a recent interview that the company is closely monitoring the potential impact of the upcoming U.S. tariff policy changes, effective May 2, on its air cargo business. Under the new policy, small parcels under $800, which previously enjoyed tax exemptions, will no longer be exempt, posing a significant challenge to air transport businesses focused on e-commerce platforms.

Liu Yunfu noted, "The impact on these goods is expected to be significant." He emphasized that although there is a noticeable "90-day shipping surge" in the market, the overall willingness of shippers to dispatch goods has not significantly increased, indicating ongoing uncertainty about the policy's future developments.

90-Day Shipping Surge: Space Scramble and Rising Freight Rates Coexist

According to information from logistics providers and shipping companies, following the U.S. government's early April announcement of tariffs up to 145% on Chinese goods and a 90-day "reciprocal tariff" grace period for non-Chinese regions, a "space scramble" quickly emerged in the Asia-to-U.S. sea and air transport market.

In air transport, freight rates surged rapidly after April 8, with prices on some routes temporarily soaring to NT$500 per kilogram. Although prices have slightly receded, they remain at high levels. In sea transport, container freight rates increased by over 30% in the short term, especially on routes departing from China, Taiwan, and Southeast Asia, where space was in short supply, leading to a "capacity crunch" phenomenon.

However, despite the short-term surge in shipping volume, the overall willingness to ship has not increased in tandem. Starlux Airlines observed that many shippers are still waiting to see if the policy will be adjusted again or for more detailed tariff implementation specifics. This "volume increase, weak willingness" phenomenon reflects the market's high sensitivity to policy uncertainty.

Starlux Airlines' North American Freight Rates Slightly Lower Than Competitors

Regarding freight rates, Starlux Airlines currently offers air freight prices for North American routes at NT$130 to NT$180 per kilogram for the West Coast and about NT$200 for the East Coast. Compared to other airlines with dedicated cargo planes, Starlux's rates are slightly lower.

Liu Yunfu explained that this is mainly due to Starlux Airlines' unique product mix and cargo size structure. He noted, "Our goods mainly consist of medium to small-sized, higher-value items, which sets us apart from other operators that focus on bulk goods." Additionally, Starlux Airlines uses passenger aircraft belly cargo, which, although limited in capacity, offers certain advantages in cost and flexibility.

Starlux Airlines launched its Taipei to Los Angeles route in April 2023, using the A350-900 wide-body aircraft, which has a certain cargo capacity to meet both passenger and cargo needs. According to flight information provided by travel agencies, Starlux Airlines currently offers daily flights between Taipei and Los Angeles, providing stable capacity support for cargo transport.

Market Observation: Supply-Demand Mismatch Amid Policy Changes

Despite the short-term phenomena of space scrambling and rising freight rates, the overall market remains highly unstable. According to freight market observations, some shipping companies have begun adjusting routes and space allocations to respond to demand fluctuations. For example, some sea transport companies have chosen to cancel or delay scheduled flights, leading to a "blank sailing" trend spreading across the entire Pacific route.

Additionally, according to a report by Linerlytica, China's container booking volume is expected to plummet by 30% to 60% over the next three weeks, with a 10% to 20% decline in other Asian regions. This indicates that despite the short-term shipping surge, medium to long-term shipping momentum remains unstable.

In air transport, Freightos noted that although air freight prices from China to the U.S. remain high, the anticipated removal of small parcel tax exemptions in May is likely to suppress air transport demand, particularly with a significant reduction in shipments from e-commerce platforms like Shein and Temu.

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