E-commerce Giants Transforming Air Freight Dynamics
In a transformative shift for the global air cargo market, Chinese e-commerce platforms SHEIN and TEMU have adopted a direct shipping model, dispatching products straight from Chinese factories to consumers in Europe and the United States. This approach is rapidly consuming air freight capacity and sparking concerns about capacity shortages and soaring freight rates as the year-end peak season approaches.
Explosive Growth and Consumer Appeal
In 2023, SHEIN and TEMU have captivated the U.S. market with their ultra-low prices, attracting a massive consumer base. According to a survey by Omnisend, 70% of American consumers shopped on global and Chinese online platforms in 2023, with 57% of them purchasing from TEMU, 43% from SHEIN, and 33% from TikTok. This trend has significantly contributed to the surge in air freight volumes.
Impact on Air Freight Rates and Capacity
The increasing volumes from direct shipments have intensified competition for air freight capacity, leading to higher costs. June, traditionally a low season before the holiday shopping rush, saw air freight rates rise by approximately 40% year-on-year. Data from Xeneta indicates that late June’s average spot price for air freight from Southern China to the U.S. was $5.27 per kilogram, more than double the rate in 2019.
Changing Market Dynamics
Niall van de Wouw, Head of Air Cargo at Xeneta, emphasized that the rapid rise of Chinese e-commerce has fundamentally altered the air freight market. According to the International Air Transport Association (IATA), global air cargo demand rose by 14.7% year-on-year in May 2023, driven by trade growth, e-commerce expansion, and constraints in sea freight capacity. The Asia-Pacific region, in particular, saw a 17.8% increase in demand, with significant growth on trade routes between Africa and Asia, Europe and Asia, and within Asia itself.
Strategic Shifts Among Major Players
SHEIN and TEMU’s low-cost apparel and home goods are increasingly taking up air cargo space traditionally reserved for high-value items like smartphones and perishable goods. Reports indicate that these two companies alone send nearly 600,000 parcels to the U.S. daily, requiring around 88 Boeing 777 freighters to handle their global shipments.
Industry Response and Future Outlook
Major logistics providers are urging retailers and manufacturers to secure air freight contracts early to avoid missing out during the peak season. Companies like Atlas Air and Korean Air are expanding their flight capacities to meet the growing demand from Chinese e-commerce. Despite these efforts, the capacity remains tight, and the air freight market is likely to experience continued pressure over the next 5-10 years.
Emerging Competition
Amazon has also entered the direct shipping fray, launching a new section on its main site for products priced under $20, shipped directly from China to U.S. consumers. This move is seen as a response to the competitive pressure from TEMU and SHEIN. The year-end shopping season could see even fiercer competition for air freight space.
Conclusion
Chinese e-commerce platforms like SHEIN, TEMU, TikTok, and AliExpress are reshaping the global air cargo market and disrupting traditional logistics models. The industry’s ability to adapt to these changes will be crucial in maintaining efficient supply chains and managing costs. As the peak season approaches, strategic planning and early contract negotiations will be essential for businesses looking to navigate this evolving landscape.
What strategies are you adopting to navigate the increasing air freight demand? Share your insights in the comments below!
