Chinese cross-border e-commerce platforms TEMU and SHEIN are reshaping the air freight market with their direct shipping model, where products are shipped directly from Chinese factories to consumers in Europe and the United States. This model is rapidly consuming air freight capacity and raising concerns about potential capacity shortages and price spikes during the year-end peak season.

In 2023, SHEIN and TEMU saw explosive growth in the U.S. market, attracting many consumers with extremely low-priced products.

According to a survey by the email and SMS marketing platform Omnisend of 1,000 Americans, 70% of U.S. consumers shopped on global and Chinese online platforms in 2023. Among them, over half (57%) shopped on TEMU, 43% on SHEIN, 33% on TikTok, and 20% on AliExpress. Additionally, more than half (51%) of U.S. consumers bought adult apparel from SHEIN, and 37% purchased home goods from TEMU. One-fifth of U.S. consumers reported shopping on TEMU, SHEIN, AliExpress, Amazon, and Etsy at least once a week.

To accelerate their growth, e-commerce platforms like SHEIN and TEMU are adopting a direct shipping model, where goods are shipped by air directly from Chinese factories to overseas consumers. This model has significantly increased shipment volumes from southern China, intensifying competition in the air freight market, leading to higher costs and capacity shortages at major Asian air freight hubs, and eliminating traditional seasonal fluctuations.

For example, June, usually a slow season before the year-end holiday shopping peak, saw air freight rates rise by about 40% compared to the previous year due to the influence of platforms like SHEIN and TEMU. According to data from Xeneta, a sea and air freight rate benchmarking and market intelligence service, the average spot price for air freight from southern China to the U.S. in late June was $5.27 per kilogram, more than double that of 2019. Niall van de Wouw, head of air freight at Xeneta, noted that the rapid rise of Chinese e-commerce has drastically reshaped the air freight market in a very short time.

Data from the International Air Transport Association (IATA) shows that, driven by trade growth, booming e-commerce, and sea freight capacity constraints, air freight demand has surged in all regions. Global air freight demand, measured in cargo ton kilometers (CTKs), grew by 14.7% year-over-year in May 2023, marking six consecutive months of double-digit year-over-year growth. The Asia-Pacific region saw particularly strong demand, with air freight demand up 17.8% year-over-year in May, and the Africa-Asia trade route growing by 40.6% year-over-year. The Europe-Asia, intra-Asia, and Middle East-Asia trade routes grew by 20.4%, 19.2%, and 18.6%, respectively, with capacity up 8.4% year-over-year.

Traditionally, cargo planes flying from Asia to Europe and the U.S. carried high-value small items like smartphones and laptops, as well as perishable goods like fish and flowers. Now, low-cost apparel and home goods from SHEIN and TEMU are occupying these air freight spaces.

According to a report by the U.S. Congress in June 2023, TEMU and SHEIN together send nearly 600,000 parcels to the U.S. daily. Research by Cargo Facts Consulting in February showed that TEMU and SHEIN transport about 9,000 tons of goods globally each day, requiring about 88 Boeing 777 freighters to fully load.

Specifically, TEMU's daily shipping volume reaches 4,000 tons, SHEIN's 5,000 tons, Alibaba's 1,000 tons, and TikTok's 800 tons.

Yngve Ruud, Vice President of Air Logistics Operations at Swiss freight giant Kuehne + Nagel, noted that TEMU and SHEIN were not even participants in the air freight market in 2022, but by the end of 2023, they had become the two largest air freight shippers globally.

Tim Scharwath, CEO of DHL Global Forwarding, stated that in less than two years, Chinese e-commerce platforms have rapidly expanded and now occupy more than 30% of the cargo space on flights exporting from Asia. DHL is urging retailers and manufacturers to sign air freight contracts early to avoid missing opportunities due to capacity constraints during the year-end shopping season. Waiting until October to request additional air freight space might result in unmet demand.

To alleviate the pressure on air freight, especially from China, many international airlines are adding new flights and capacity. For example, Atlas Air has partnered with YTO Express to launch a second air freight plane between China and the U.S., and Korean Air plans to meet the growing e-commerce demand from China by strengthening customer partnerships and allocating capacity on key routes.

However, these added capacities seem insufficient to meet the demands of e-commerce platforms. Even with normal growth rates over the next 5-10 years, global long-haul wide-body freighter capacity will likely remain tight.

It's also worth noting that Amazon has launched a similar direct shipping service from China. On July 1, Amazon announced a new dedicated section on its main website offering unbranded products priced under $20, shipped directly from China to U.S. consumers. This move is seen by many as a response to the increasingly fierce competition from Chinese e-commerce platforms like TEMU and SHEIN. If Amazon's direct shipping service joins the competition, air freight space competition during the U.S. shopping season at the end of the year could be even more intense.

In conclusion, Chinese e-commerce platforms like TEMU, SHEIN, TikTok, and AliExpress have become an unstoppable global force. Their direct shipping model, where products are air freighted directly from Chinese factories to global consumers, is disrupting traditional markets and the global e-commerce ecosystem, reshaping the global air freight market. The air freight industry must strive to adapt to this new reality. As Basile Ricard, Operations Director for Greater China at Bolloré Logistics, said, the biggest factor currently affecting air freight is not the ongoing conflict in the Red Sea, but Chinese e-commerce platforms like SHEIN and TEMU.