American consumers’ insatiable demand for products from two Chinese companies is causing a stir in the global air cargo industry. Shein and Temu, owned by PDD Holdings, have upended traditional shipping practices by sending a massive volume of their products directly from Chinese factories to US customers by air – often in individually addressed packages.
This surge in demand, unforeseen by industry experts just a year ago, has sent air cargo rates from China to the US soaring by 14% according to a Nikkei Asia report [Nikkei Asia report on Air Cargo Rates]. This flies in the face of the global trend, which has seen average air cargo rates decline by 8%. Rates for cargo moving in the opposite direction, US to China, have plummeted by an even steeper 29%.
Analysts attribute this disruption to the sheer volume of goods being shipped by Shein and Temu. Niall van de Wouw, chief air freight officer at logistics analytics firm Xeneta, described their shipment volumes as “crazy” – potentially on par with the world’s largest freight forwarders [quote about Shein and Temu’s shipping volume].
The sudden influx of individually addressed packages has overwhelmed the air cargo industry, which is accustomed to handling bulk shipments. This logistical strain has pushed air cargo rates upwards, impacting not just Shein and Temu’s business but also other companies relying on air freight to move goods between China and the US.
The industry is scrambling to adapt to this new reality. With no signs of the American shopping spree abating, air cargo companies are looking for ways to increase capacity and streamline processes to handle the unique demands of these high-volume e-commerce giants.
