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Diving summary:
- According to the company’s earnings results, DHL Express volumes to the United States declined in the third quarter due to higher tariffs and the end of the country’s minimum exemption.
- The carrier’s flagship service, Time Definite International, saw its US bill weight drop 32% in the quarter from a year ago, per revenue offering. The United States on August 29 removed low-cost tariffs that allowed imports under $800 to enter the country duty-free, exposing low-cost shipments to new tariffs imposed by President Donald Trump’s administration.
- Despite volume pressures, DHL Express saw earnings before interest and taxes rise 1 percent in the third quarter. The company attributed the results in part to price adjustments and capacity management.
Diving Insights:
The end of de minimis exemptions has created customs problems, postal restrictions and price pressures for companies as they try to adjust their supply chains to the new US business environment. Business-to-consumer shippers are particularly at risk because they typically ship more shipments that historically qualify for the exemption than business-to-business shippers.
“Especially the very low-value B2C cases have been impacted, partly also because customers are then switching to different forms of B2C shipping to the U.S., but we’ve seen more flexibility on the B2B side,” DHL Group CFO Melanie Kreiss said on Thursday on a third-quarter earnings call.
Even if the Supreme Court blocks Trump’s ability to impose tariffs under the International Emergency Economic Powers Act, DHL Group CEO Tobias Mayer doesn’t see an increase in business-to-consumer volumes. “There are other legal grounds that the president could use to impose tariffs,” Meyer said during the call.
Faced with US disruptions, DHL Express said in its results that it had “an opportunity to grow on business lines with underutilized capacity and improve network imbalances”. The company has also prioritized cost savings and volume changes in its air network and improving productivity in its ground and hub operations.
“I think we’ve been able to handle it [de minimis’ end] Mayer said: Very effective with capacity adjustment and displacement.
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