The online appeal of heavily discounted goods distributed directly out of China by e-commerce sites Temu and Shein is causing major disruptions in the global air cargo industry, squeezing out capacity for other traders and driving up freight rates to near-record levels, Forbes reports.
According to data from Cargo Facts Consulting, the two sites, which have gained notoriety for their unbelievably low pricing, collectively ship around 9 000 tonnes of cargo per day.
To put that into perspective, Shein and Temu ship the equivalent of approximately 88 fully-loaded Boeing 777 freighters every day.
Cypriot trading broker XM found that the volume despatched by the sites, together accounts for more than double the daily cargo shipped by Alibaba.com and TikTok Shop combined.
Forbes Africa says the surge in demand from Shein and Temu has caused airfreight costs from major Chinese hubs like Guangzhou and Hong Kong to sky rocket.
The average spot rate from southern China to the US reached $4.75 per kilogram in May 2024, more than double the rate during the same period in 2019.
This is approaching the record highs seen during the pandemic in 2020 to 2021, but this time the price spike is driven solely by the growth of these two e-commerce players.
To keep up with demand out of Asia, some logistics firms and airlines are adding more flights and capacity.
Korean Air reported a 20% year-over-year increase in cargo revenue in the first quarter of 2024, citing 'robust cargo demand' and plans to allocate more capacity on key routes to China.
Atlas Air also announced it would launch a second freighter in partnership with Chinese shipper YunExpress.
The surge in demand from Shein and Temu is also altering global shipping patterns. Temu has opened new sea and air routes via Taiwan, Japan and Korea into the US, driving up freight rates on these alternative routes.
In addition, the government in Beijing has also touted a new air cargo route from Zhengzhou to Dallas and Atlanta to serve e-commerce across borders.
But short-term measures to cope with the cargo deluge of Shein and Temu are not expected to last in the long run.
Industry analysts warn that the air cargo industry may struggle to keep up with the staggering growth of the two e-commerce sites.
Wenwen Zhang, the airfreight analyst at benchmarking platform Xeneta, says that “Shein and Temu have a continuous 'thirst' for airfreight, which is unparalleled to anything we have seen previously.”
As these companies continue to expand, the strain on global air cargo capacity is likely to intensify.
