Shein, Temu and other e-commerce retailers are upending global air cargo industry

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An Eva Air Cargo Boeing 747-400F freight airplane approaches to land at Changi International Airport in Singapore on June 10, 2018. The rapid rise of fast-fashion e-commerce retailers such as Shein and Temu is upending the global air cargo industry, as they increasingly vie for limited air-cargo space. (Tim Chong/Reuters)

The rapid rise of fast-fashion e-commerce retailers such as Shein and Temu is upending the global air cargo industry, as they increasingly vie for limited air-cargo space to woo consumers with rapid delivery times, industry sources say.

Shein, PDD Group’s Temu and ByteDance’s TikTok Shop, which recently launched online shopping in the U.S., ship the majority of their products directly from factories in China to shoppers by air in individually addressed packages.

Shein and Temu together send almost 600,000 packages to the United States every day, according to a June 2023 report by the U.S. Congress, and their growing popularity is boosting air-freight costs from Asian hubs like Guangzhou and Hong Kong, making off-peak seasons almost disappear and causing capacity shortages, the sources said.

ANALYSIS Could Red Sea attacks reignite supply chain chaos?

“The biggest trend impacting air freight right now is not the Red Sea, it’s Chinese e-commerce companies like Shein or Temu,” said Basile Ricard, director of Greater China operations at freight forwarder Bollore Logistics.

According to data aggregated by Cargo Facts Consulting, Temu ships around 4,000 tonnes a day, Shein 5,000 tonnes, Alibaba.com 1,000 tonnes and TikTok 800 tonnes. That equates to around 108 Boeing 777 freighters a day, the consultancy said.

Driven by robust demand for their low-priced apparel — like $10 Cdn tops and $5 biker shorts — Shein alone accounts for one-fifth of the global fast-fashion market, measured by sales, and has fuelled growth of China’s e-commerce industry, according to Coresight Research.

CBC News has reached out to Shein and Temu for comment.

Fast fashion now accounts for half of China’s total cross-border e-commerce shipments and takes up about one-third of global long-distance cargo aircraft, according to cross-border transportation media firm Baixiao.com.

Shein and Temu’s growth is squeezing out space for other industries on air freighters, just as global firms are scrambling to find alternative logistics options due to disruptions in the Red Sea.

The crisis emerged when Yemen’s Houthi militia group began attacking shipping vessels in the Red Sea, forcing companies to reroute around the Suez Canal, one of the world’s most important shipping lanes.

“When the Suez Canal [crisis] hit, there was no capacity to be bought, because e-commerce has bought it all,” said an executive at an air cargo carrier who requested anonymity due to industry sensitivities.

Shein and Temu together send almost 600,000 packages to the U.S. every day, according to a June 2023 report by the U.S. Congress. (Yuichi Yamazaki/AFP/Getty Images)

Pronounced demand for air freight from fast fashion started increasing dramatically in the second half of last year, several sources said.

A German logistics source said large tech firms like Apple only transport about 900 tonnes maximum a day and the growing cargo demand from fast fashion could push out traditional long-term customers, as they vie for limited air capacity.

Some air-freight carriers have responded to the increased e-commerce demand by providing additional charter capacity, “which is already heavily booked for the long term,” said a spokesperson for German logistics firm Schenker.

Apple declined to comment. TikTok Shop did not return messages seeking comment.

“Shein is continually optimizing its efforts to ensure the best customer experience and fulfilment efficiency,” a Shein spokesperson said, declining to elaborate.

The hunt for capacity

The sudden spike in demand from fast fashion that began last year has lifted air-cargo rates from China and is raising concerns about longer-term capacity shortage.

“Based on what we have seen, this model of [airborne] e-commerce is not sustainable, neither from a profit or environmental standpoint,” said Guillermo Ochovo, director at Cargo Facts Consulting.

He said both Shein and Temu are now looking more at sea freight due to the high cost of air freight and considering opening warehouses outside of China to shorten transport times to other regions.

A user opens the Temu app to a Victoria Day promotion on May 19, 2023. (Aloysius Wong/CBC)

In its 2023 commercial market outlook, Boeing estimated China’s air cargo fleet would more than triple to 750 aircraft between 2022 and 2042. Boeing declined to comment.

E-commerce firms are approaching airlines directly to secure more capacity, according to the executive at a major air cargo carrier and Unique Logistics.

Shein has started sending goods to U.S. warehouses to speed up shipping times. Temu told Reuters in a statement that it is looking for sellers based in the U.S. and Europe “to reduce shipping distances and delivery times” to shoppers.

Airlines and freight forwarders are also contemplating how much capacity to set aside for Temu and Shein’s business as shipments and prices fluctuate.

The impact of China’s new e-commerce giants is “game-changing,” said Marc Schlossberg, executive vice-president of Air Freight at Unique. “They … are emerging as the most important drivers in the industry.”