The sheer volume of packages from these fast-fashion giants has led to increased air freight costs from key Asian hubs, creating capacity shortages and eliminating traditional off-peak seasons.
What Happened: According to Reuters, e-commerce giants like Shein and Temu — owned by PDD Holdings Inc (NASDAQ:PDD) — are reshaping the dynamics of air freight. The two companies, alone, send nearly 600,000 packages to the U.S. every day, as reported by the U.S. Congress in June 2023.
Even TikTok Shop, the e-commerce arm of ByteDance, has emerged as a major player in the shipping space due to the substantial volume of products directly from Chinese factories to consumers worldwide via air cargo.
"The biggest trend impacting air freight right now is not the Red Sea," says Basile Ricard, director of Greater China operations at freight forwarder Bollore Logistics, referring to the ongoing conflict in the Red Sea disrupting the cargo industry. "It's Chinese e-commerce companies like Shein or Temu."
Data from Cargo Facts Consulting shows the daily tonnage shipped:
Temu: 4,000 tonnes
Shein: 5,000 tonnes
Alibaba Group Holding Ltd (NYSE:BABA): 1,000 tonnes
TikTok: 800 tonnes.
Why It Matters: Global expansion further intensifies the pressure on air cargo capacity.
Temu, for example, will continue to disrupt traditional markets and reshape consumer expectations as it expands across Korea and Japan.
In Korea, Temu's strategic marketing tactics, including discounts of up to 90%, free returns, and enticing rewards, have led to a tenfold increase in subscribers, reaching 5.7 million in January.
In Japan, Temu's monthly user base reached a staggering 15.5 million in January 2024. That's more than the combined user base of Japan's three major mainstream e-commerce platforms: Amazon Shopping, Rakuten Market, and Yahoo! Shopping.
As the air cargo industry grapples with this new reality, it becomes evident that the biggest trend impacting air freight today is the unstoppable force of Chinese fast-fashion e-commerce platforms.