After the tariff breakthrough: a 90-day window period to rush for production and shipment, but there are even more important things.

The booking volume of container transportation from China to the United States has soared by nearly 300%.

Text by Wang Haoran

Edited by He Yang

"Finally, we can ship the goods!"

After waiting for more than a month, overseas merchants have finally迎来 the day when they can place orders for shipping.

On May 12, the "Joint Statement of the China-US Geneva Economic and Trade Talks" was released. The tax increase burden on Chinese products exported to the United States has been reduced from 145% to 30% (another 24% of tariffs will be suspended for 90 days). This is already an acceptable figure for many Chinese overseas merchants and American traders.

On May 13, the White House issued a presidential executive order. The tariffs on small packages (valued at less than $800) have also dropped significantly - the ad valorem tariff rate has been reduced from 120% to 54%, while maintaining a specific tariff of $100 per package (the original plan to increase it to $200 on June 1 has been revoked).

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If last month's mood was one of anxiety and waiting, now it is one of excitement and acceleration. Orders are pouring in for foreign trade factories, and the machines in the factories are roaring again; cargo ships are being urgently redirected to the US route, and shipowners are having a bumper time again; American traders are also cheering - this year's Christmas trees are finally secured.

No one can predict what will happen after 90 days. At least for now, the window period has opened. "Basically, we can get through this year," said a seller.

Seize the time! Grab the shipping space!

The returning orders and the crazy sea freight

Just four hours after the news of the tariff reduction was released, Ding Linfeng, the general manager of Shanghai Weierda Sunshade Equipment Co., Ltd., a merchant on Alibaba.com, received an order for a whole container from his American customer without even negotiating the price. The value of the goods is about $100,000, and the customer also claimed that he would place another order for a container later. Another American customer of his also plans to place an order worth $300,000 within a week.

"Most of our customers just place orders without even bargaining. Now they think that bargaining is a waste of time. They need to replenish the possible shortage of goods immediately, and even replenish more to prepare for future uncertainties," said Ding Linfeng. Their factory originally planned to ship the goods in July, but now, at the request of the customers, the construction period has been shortened to the end of June, and all the goods must be shipped out.

Wang Li, who runs a foreign trade factory for household products in Shenzhen, mainly contacts customers through Alibaba.com. Her annual revenue is about $10 million. Within just one day after the tariff reduction, she received orders worth $300,000, and all the orders she received in January and February have also resumed production. "Most of our goods are large-sized, and we mainly rely on sea freight. Some American customers are Amazon sellers, and their inventory is in short supply. They can't wait and even choose air freight directly," she said.

The phenomenon of seizing time and shipping space also occurs among cross-border e-commerce enterprises doing to C business.

A leading seller in the 3C category told Yibang Power that in the past month, they had to suspend shipping goods to their overseas warehouses in the United States due to the high tariffs and controlled their inventory by raising prices. Now, they are stepping up replenishment.

Lu Zhoujin, the deputy general manager of the audio and video conferencing tool brand EMEET, also said that EMEET is rushing to stock up in the United States. Due to the high tariffs in the previous period, EMEET reduced its inventory, and some best-selling products are on the verge of running out of stock. "The e-commerce promotion in July is coming. Having goods means having a chance to win."

Data released by the trade tracking agency Vizion shows that after the tariff reduction, the booking volume of container transportation from China to the United States has soared by nearly 300%. Ben Tracy, the vice president of strategic business development at Vizion, said that the seven - day average booking volume as of May 5 was 5,709 TEUs, while the seven - day average booking volume as of May 14 soared by 277% to 21,530 TEUs.

The relevant business person in charge of Yunquna analyzed to Yibang Power that since May 12, the shipment volume in the entire market has started to rebound and skyrocket. In less than two days, the shipping space on the US route of some shipping companies has become tight or even full. "It is expected that the shipping space will become even more tense by the end of May." Along with this, the overseas warehouses at the US destination ports may also face a wave of full storage.

The short - term demand has been rapidly released, and the shipping capacity needs to be replenished urgently. According to relevant data from Yunquna, the freight volume on the US route in April decreased by 30% - 40% year - on - year. To cope with the sharp decline in cargo volume, shipping companies cancelled a large number of flights and reduced their shipping capacity. Records show that 80 cargo ship flights departing from China were cancelled; some shipping capacity has been allocated to the European and Latin American routes. Now, this withdrawn shipping capacity must be quickly redirected back.

Yunquna said that starting next week, some shipowners will increase the number of voyages on the US route, and the shipping capacity will gradually recover within a month. The increase in freight rates has already been evident. Many shipping companies have announced price increases on the US route, with the increase ranging from $800 to $3,000.

A cross - border seller told Yibang Power that the increase in freight rates has even completely offset the decrease in tariffs. "In fact, the 145% tariff increase before was not fully implemented. The US Customs actually collected 70% - 80% last month, and now it has been reduced by 20%," he said. "But the price of a container has increased so much - the declared value is basically between $5,000 and $7,000, and the difference in tariffs and the increase in freight rates are almost the same." There are also market voices saying that the sea freight may return to the situation in 2021.

Almost all of Ding Linfeng's customers are urging him to ship the goods quickly. A wave of new orders will arrive in one or two weeks, and the production cycle of the factory is mostly about 30 days, which means that the peak of sea freight after one month is almost predictable, and no one wants to be stuck at this juncture. "But no matter how hard we try, we may still face a sharp increase in sea freight in the future. We won't stop shipping goods because of the sky - high sea freight."

In order to rush to ship the goods, foreign trade factories have almost all started working overtime and recruited many temporary workers. The average production cycle of 30 - 45 days has been shortened by about 10 days.

The direct - shipped small packages are "reviving",

but they can't return to the past

As early as when Trump took office, the US began to tighten the import management policy for small packages from China. From the abolition of the T86 tax - free policy to the unprecedented 120% ad valorem tax (or a flat tax of $200 per package) being put on the table, the market was filled with the voice of "small packages can no longer be done".

Affected by the high tariffs, many small - package direct - shipping services such as Temu and SHEIN have issued notices of price increases starting from April 25. Temu even stopped exporting directly - shipped products from China to the United States, only showing the semi - managed product list shipped from local US warehouses, and all fully - managed products were marked as "out of stock".

On May 13, the tariff rate on small packages was reduced to 54%, and a specific tariff of $100 per small postal package was maintained, which seems to have brought a glimmer of hope to the industry. Small - package direct - shipping service providers such as Yuntu Logistics, Orange Connect China, and DSF have successively issued notices to sellers to lower relevant fees.

A logistics industry insider told Yibang Power that the volume of small packages on the US route of logistics service providers is recovering. Although the overall volume of small packages has decreased month - on - month in the past period, the decline is not large (note: the US officially started levying tariffs on small packages from China on May 2). Especially for leading and powerful service providers, they did not cancel their air cargo charters during the short - term fluctuation period and are now increasing the number of flights.

The news that Temu is restarting its fully - managed business has also been widely spread. A merchant told Yibang Power that there are already signs of a small - scale resumption of Temu's fully - managed business.

On the evening of May 13, AliExpress also announced that it would relaunch the previously cancelled platform logistics service (4PL, where the platform takes care of logistics services and is responsible for after - sales disputes and other aspects). Its official also said that if consumers request a tax refund difference, the platform will also provide corresponding subsidies to merchants.

In fact, whether it is large - scale trade or small packages, the tariffs have increased compared with before this year. After the release of the "Joint Statement of the China - US Geneva Economic and Trade Talks" on May 12, the tariff rate imposed by the US on China this year has been reduced from 145% to 30%. However, adding the original basic tax rates (X%) for various purposes and the 25% tariff imposed after 2018, the overall tax rate is still very high (i.e., X% + 25% + 30%).

In other words, from the perspective of tariff rates, the current 54% for small packages is still slightly lower than the more than 55% for large - scale trade. Considering the different cost structures of various categories and calculating the overall accounts, and combined with the product and supply - chain characteristics of some categories that are more suitable for cross - border direct shipping, there is still a large survival space for the small - package shipping channel.

However, a direct - shipped small - package seller who had previously stopped his US business told Yibang Power that he has no intention of returning to the US market in the short term. "The cost is still rising. And more importantly, customs clearance has become more troublesome."

Another seller said that the pressure has indeed been reduced a lot, but the tax rate is still high, and the profit margin has been greatly squeezed. Although they have increased the prices of some products, they still face an unsolvable problem: if the price increase is too small, it cannot fully offset the rising cost; if the price increase is too large, the sales volume will immediately decline.

Lu Zhoujin also said that after the cancellation of the small - package tax - free policy, EMEET has comprehensively reduced the proportion of direct - shipped small packages in its business and tried to adopt the method of shipping in full containers to overseas warehouses for stocking. "Even if the tax rate for small packages has decreased now, and the cost is similar, we will still pay more attention to the user experience. Stocking up in overseas warehouses first and then shipping the goods to users from local warehouses has a faster delivery time, a higher conversion rate, and also reduces the return and refund rate."

The fishing gear brand BKK adjusted its logistics and warehousing plan at the beginning of this year and completed the opening of a new warehouse in May to ensure sufficient inventory to support three months of sales before the tariff adjustment. After the tariff reduction, CMO Scott told Yibang Power that whether it is e - commerce goods or large - scale trade goods, BKK will transport them through the traditional foreign trade sea - freight channel, mainly a combination of sea freight and partial air freight.

The disrupted rhythm

and the missed and calm voices

On May 14, TikTok Shop announced the rhythm of this year's mid - year promotion: the promotion time in Europe is basically in late June, while the promotion time in the US is from July 7 to July 19. For comparison, TikTok Shop in the US had two mid - year promotions last year - the summer promotion in early June and the mid - year promotion in early July; TikTok Shop in the US did not have a summer promotion in early June this year.

Source: TikTok Shop Cross - border E - commerce

There is speculation that under the high tariff burden of up to 145% before, merchants were unable to stock up. After the tariff reduction on May 12, merchants' urgent stocking may not be able to catch up with the summer promotion in early June. "After all, the sea - freight time between China and the US takes about two months."

In addition, the promotion rhythm in the second half of the year has also changed due to the tariff issue. From the Halloween promotion to the "Black Friday - Cyber Monday" promotion and then to the Christmas promotion, the traditional peak season in North America, which is concentrated in the fourth quarter, usually corresponds to a purchase cycle from July to September. Now, the stocking rhythm is being moved forward as a whole due to the 90 - day window period (note: in the joint statement on May 12, another 24% of tariffs will be suspended for 90 days).

Zhang Huafeng, the COO of Duke Shipping Agency, wrote in his personal column: It is expected that the peak season for sea freight on the US route this year will end one month earlier, and shipowners will invest more shipping capacity from June to July. At that time, the number of ships arriving at the port will exceed the handling capacity of US docks, and the possibility of port congestion will increase.

However, for many manufacturers, the return of this wave of orders cannot fully compensate for the losses they suffered in the past period.

A manufacturer of household products told Yibang Power that in April, in order to maintain orders with US buyers and prevent the factory from shutting down, both the manufacturer and the buyers made concessions - the buyers bore part of the tariffs, and the manufacturer lowered its profit margin. Overall, the orders in May decreased by about 50% year - on - year. Now, with the tariff reduction, the goods produced by domestic factories will be rushed to be shipped out by mid - June.

Another manufacturer of holiday decorations also pointed out that the usual shipping rhythm has been disrupted, and his production line has been shut down for more than a month. Even if it has resumed now, the overall sales situation this year will still be affected to a certain extent.

In addition, for B2C cross - border e - commerce sellers, if they stock up too early for the Q4 peak season, the capital turnover pressure will be very large. "We dare not stock up in large quantities, otherwise the risk of warehousing fees will exceed the tariff itself," an Amazon seller told Yibang Power.

On May 14, DJI released its latest flagship drone, the Mavic 4 Pro. However, DJI officially stated that this new model will not be officially sold in the US market. "In the current highly uncertain environment, market decisions are often affected by multiple factors. Although it cannot be attributed to a single reason, tariffs are indeed one of the important factors we consider."

Some e - bike companies also said that the tariffs have disrupted the development rhythm of the entire industry. The European market has become a graveyard for e - bike companies in the past two years, so everyone has been focusing on the US market. But now, facing the rising tariff cost in the US, they can only "swallow it hard".

The executive director of the Port of Los Angeles analyzed that some key supplies and holiday goods will be replenished first with the help of this tariff reduction, but ordinary goods such as refrigerators and garden furniture are still difficult to flood in large quantities.

The months - long tariff war has made manufacturers realize that they cannot pin all their hopes on the US market and must find new ways out. Ding Linfeng has been continuously exploring markets in Europe, Southeast Asia, the Middle East, etc. in the past two or three years; Wu Qingfen, the general manager of Yiwu Jingwen Import and Export Co., Ltd., has also been investigating markets in Southeast Asia, Africa, etc., and she plans to visit Africa in July.

Some enterprises that have pre - arranged their supply chains overseas have quietly survived this tariff crisis. The operation manager of a leading battery company told Yibang Power that they have a factory in Southeast Asia. While their competitors stopped shipping goods in the early stage, they continued to operate and plan to increase their marketing expenditure and stocking during the window period to seize a part of the market; another pet products company said that they have factories in the US, New Zealand, Canada, Cambodia, etc., and are less affected by tariffs. The aforementioned manufacturer of household products also mentioned that their orders have started to be transferred to Vietnam for production.

Can the peak season this year be prosperous as expected? What other changes will occur in the US market? No one can predict, and no one can rest easy.

This article is from the WeChat official account "Yibang Power", author: Wang Haoran.