Shein and Temu’s popularity in the US overwhelms Air Cargo Industry, rates spike by 14%

The new Chinese e-commerce powerhouses Shein and Temu have once again turned the global air cargo industry upside down by pushing up the air cargo rates from China to the US by 14% and creating a situation where airlines are forced to alter global trade routes for the air freight industry.

Having recently made their debut in the US market, these online retailers ship the majority of their products directly from factories in China to shoppers by air in individually addressed packages in the US. In only a year, these brands have gained much popularity among Americans, creating a spike in cargo prices.

A report in Nikkei Asia said that in April, the growing demand in the US pushed up air cargo rates from China to the US by 14 percent. The global average was down eight per cent in the same period, and rates for cargo from the US to China were down 29 per cent. Xeneta data showed the “average spot rate” from southern China to the US is now at about $4.75 per kilogram, more than double the rate the rate during the same period in 2019, when the rate was $2.32 per kilogram.

Shein and Temu alone dispatch nearly 600,000 packages daily to the United States, as per a June 2023 U.S. Congress report.

Experts did not anticipate such a demand coming in from these online retailers and are now concerned about the challenges that might arise in the fourth quarter during the traditional big season, i.e., the Christmas holiday period.

LI reported in April how these fast-fashion retailers are spurring capacity shortages and outpacing traditional industry needs, including tech giants like Apple, which transport a maximum of 1,000 tons daily.

These companies combined to ship around 9,000 tons of cargo worldwide every day, or approximately 88 Boeing 777 freighters filled to the brim, the Forbes report said, citing data from research firm Cargo Facts Consulting.

To meet up with the demand, e-commerce giants like Temu are also 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.

“Shein and Temu have a continuous ‘thirst’ for air freight, which is unparalleled to anything we have seen previously,” Wenwen Zhang, an air freight analyst with Xeneta, told Forbes.

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