Fast-Fashion Boom Overwhelms Air Cargo Networks, Spurs Capacity Shortages

The soaring success of fast-fashion titans like Shein and Temu is sending shockwaves through the global air cargo industry, causing fierce competition for limited capacity and surging freight expenses, according to a recent Reuters report.

These online retailers, alongside TikTok Shop, which recently entered the U.S. market, primarily ship directly from Chinese factories to consumers via air, individually addressing each package. This direct-to-consumer model has propelled their popularity, with Shein and Temu alone dispatching nearly 600,000 packages daily to the United States, as per a June 2023 U.S. Congress report.

This exponential rise in demand, underscored by Shein’s capture of one-fifth of the global fast-fashion market share, is reshaping the air cargo landscape. Data from Cargo Facts Consulting reveals staggering daily shipment volumes: Temu ships around 4,000 metric tons, Shein 5,000 metric tons, 1,000 metric tons, and TikTok 800 metric tons. These figures equate to approximately 108 Boeing 777 freighters every day, highlighting the immense strain on air freight capacity.

The surge in air cargo demand from fast-fashion retailers is outpacing traditional industry needs, including tech giants like Apple, which transport a maximum of 1,000 tons daily. This has prompted concerns about the displacement of long-standing air freight customers due to capacity constraints.

To address the challenges posed by escalating air freight costs, both Shein and Temu are exploring sea freight alternatives. Shein has already initiated shipments to U.S. warehouses to expedite delivery times and reduce reliance on costly air transport.

Boeing’s market outlook for 2023 projects a significant expansion of China’s air cargo fleet, more than tripling to 750 aircraft by 2042. In response to the growing demand, e-commerce giants like Temu are directly engaging airlines to secure additional capacity, with plans to lease 12 wide-body freighters to optimize shipping distances and speed up deliveries.

Despite efforts by air-freight carriers to expand charter capacity, industry insiders warn that long-term demand could exceed available supply, necessitating strategic planning to allocate capacity efficiently amidst fluctuating shipments and prices.

The emergence of China’s new e-commerce powerhouses is heralded as a “game-changer” by industry experts, underscoring the transformative impact of these companies on the global air cargo sector and their evolving strategies to navigate capacity shortages and rising shipping costs.

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