The U.S. Customs and Border Protection (CBP) decided to impose a 15% tariff on parcels brought in via international mail starting on the 29th of last month (local time), leading to a decline in transshipment cargo volume bound for the United States. Airlines that carry cargo are worried about a drop in performance. Until now, the United States did not impose tariffs if the value of items brought in by mail was under $800 (about 1.1 million won).

According to the Universal Postal Union (UPU), a United Nations agency, on the 28th, U.S.-bound mail volume fell by more than 80% in the week since the United States scrapped the duty-free allowance for low-value parcels. Other countries can send parcels only if a U.S.-recognized entity files and pays taxes, which is not possible through the existing international postal network.

After the tariff was imposed, Korea and the United Kingdom suspended acceptance of parcels bound for the United States and recently resumed, while many other countries remain suspended. To send a parcel to the United States, the sender must pay the tariff.

A notice about sending mail to the United States is placed at a post office in Seoul. /Courtesy of News1

In the air cargo market, routes to the Americas are considered key. Last month, air cargo sent overseas from Korea totaled 174,504 tons, with the United States accounting for the most at 42,073 tons. On Americas routes, transshipment cargo is more common than direct cargo, making them directly affected by the decline in e-commerce from China and Hong Kong.

Korean Air's standalone revenue last year (about 16 trillion won) included about 4.3 trillion won from its cargo business. On the cargo business, the Americas route accounts for about 40% of revenue. Asiana Airlines transferred its freighters to Air Zeta but is operating its cargo business through belly cargo (passenger aircraft cargo hold). The Americas route accounts for about half of cargo segment revenue.

Korean Air (left), Asiana Airlines cargo revenue trends by route /Courtesy of captured from each company's IR materials

An airline industry official said, "The United States is imposing tariffs on the entire world, so transshipment cargo volume has fallen," and added, "We are planning to diversify regions and items in anticipation of a decline in e-commerce from China and Hong Kong."

U.S. President Donald Trump has said that Chinese online companies were abusing the duty-free system for low-value parcels to avoid paying tariffs, and that he would abolish the exemption and allow no exceptions for any country.

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