Over the past six months, US tariffs have reshaped the economics of global shipping, with ripple effects hitting express carriers and freight forwarders alike. The most disruptive change has been the rollback of de minimis exemptions, which once allowed millions of small-value parcels to enter the US duty-free.
In May 2025, the US ended duty-free treatment for low-value shipments from China and Hong Kong, striking a blow at the center of cross-border e-commerce.
By August, the exemption was suspended worldwide, pulling nearly every inbound package into the tariff net. That meant longer clearance times, more paperwork, and new costs for shippers and carriers. For logistics firms that rely on speed and scale, the changes have been nothing short of destabilizing.
FedEx: A Billion-Dollar Drag
FedEx has been the most outspoken about the toll. The company estimates tariffs will shave roughly US$1 billion from operating income this year, with around US$300 million tied directly to customs clearance expenses. In one recent quarter, the elimination of de minimis shipments cut revenue by about US$150 million.
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The China and Hong Kong markets were particularly important, representing nearly three-quarters of FedEx’s de minimis parcel flows. With those volumes shrinking, the company reduced trans-Pacific outbound capacity by a quarter compared with a year earlier. Aircraft have been redeployed to Europe and Southeast Asia, where tariff headwinds are lighter.
Yet even as international business falters, FedEx has found relief in the US domestic market. Parcel volumes grew about 5% in the last quarter, offsetting some of the international weakness.
Cost-cutting efforts like network consolidation and tighter expense controls, also boosted the bottom line. Still, executives caution that adapting to Washington’s tougher tariff stance will be a long process requiring continued network rebalancing.
UPS: Cuts and Cost Pressures
UPS has been forced to make even sharper adjustments. In recent months, the company announced plans to eliminate 20,000 jobs and close 73 facilities. While some of those cuts relate to changes in its partnership with Amazon, executives acknowledged tariffs have magnified the need to resize the network.
One of UPS’s biggest challenges is delivery density. Fewer imports mean drivers make the same number of stops with lighter package loads. That inefficiency translated into delivery costs that ran about US$85 million higher than projected in a recent period. Margins have narrowed, and the company is under pressure to pass costs along where possible.
To respond, UPS has been experimenting with new surcharges on shipments from tariff-heavy markets such as China and Hong Kong. It has also stepped up its advisory services for shippers seeking to manage the new customs regime.
Inside the company, automation, route optimization, and stricter cost discipline are being rolled out as longer-term defenses.
Broader Market Impact
Other logistics providers are also adjusting. DHL temporarily suspended some business-to-consumer deliveries into the US when declared values exceeded US$800, citing the rising complexity of clearance procedures.
Freight forwarders such as Kuehne + Nagel are marketing their customs advisory services more aggressively, as shippers scramble for guidance.
The ripple effects extend to ocean freight as well. Container import volumes into the US have slowed, dragging down freight rates in certain lanes. Analysts say the tariff regime has “torched” container demand, leaving carriers with excess capacity and weaker pricing power.
Uncertainty Ahead
What makes this environment especially difficult is its unpredictability. Tariff policies have shifted suddenly, sometimes with only weeks of notice. Logistics networks spanning aircraft fleets, ground hubs, and thousands of employees, cannot be reconfigured overnight.
The risk of further escalation, or retaliation from trade partners, keeps both carriers and shippers in a defensive crouch.
For FedEx and UPS, the immediate strategy is clear: lean on domestic growth, cut costs, and redirect assets toward tariff-safer markets.
But the last six months have underscored how much US trade policy now dictates the fortunes of the global logistics industry. If tariffs remain volatile, the sector may have to permanently rethink its reliance on the low-value, cross-border parcels that once fueled its fastest growth.
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