Shein and Temu fast fashion boom shakes global air cargo industry

The rapid rise of fast fashion e-commerce retailers such as Shein and Temu is revolutionizing the global air cargo industry as they increasingly compete for limited air cargo space to attract consumers with fast transit times, more said. from ten industry sources.

Shein, PDD Group's Temu and ByteDance's TikTok Shop, which recently started shopping online in the US, ship most of their products directly from factories in China to buyers by air in individually addressed packages.

And their growing popularity (Shein and Temu together send nearly 600,000 packages to the United States each day, according to a June 2023 US Congressional report) is driving up air freight costs from Asian hubs like Guangzhou and Hong Kong, making off-peak hours stations almost disappear and causing capacity shortages, sources said.

“The biggest trend affecting air transport right now is not the Red Sea, but Chinese e-commerce companies like Shein or Temu,” said Basile Ricard, director of Greater China operations at shipper Bollore Logistics.

According to data aggregated by Cargo Facts Consulting, Temu ships around 4,000 tonnes per day, Shein 5,000 tonnes, Alibaba.com 1,000 tonnes and TikTok 800 tonnes. This is equivalent to about 108 Boeing 777 cargo planes a day, according to the consultancy.

Driven by strong demand for its low-priced clothing, such as $10 T-shirts and $5 biker shorts, Shein alone accounts for a fifth of the global fast fashion market, measured by sales, and has driven growth. of China's e-commerce industry, according to Coresight Research.

Fast fashion now accounts for half of China's total cross-border e-commerce shipments and occupies about a third of global long-haul cargo planes, according to cross-border transportation firm Baixiao.com.

Shein and Temu's growth is squeezing space for other industries on cargo planes, just as global companies struggle to find alternative logistics options due to Red Sea disruptions.

“When the Suez Canal (crisis) broke out, there was no ability to buy, because e-commerce bought everything,” said an executive at an airline cargo company, who requested anonymity due to industry sensitivities.

Strong air freight demand from fast fashion began to increase dramatically in the second half of last year, multiple sources say.

A German logistics source said that even big tech companies like Apple transport only 1,000 tons at most per day and that growing demand for fast fashion cargo could displace traditional long-term customers, who compete for limited air capacity. .

Some airlines have responded to growing e-commerce demand by providing additional charter capacity, “which is already heavily booked in the long term,” said a spokesperson for German logistics company Schenker.

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

“Shein continually optimizes its efforts to ensure the best customer experience and fulfillment efficiency,” a Shein spokesperson said, without elaborating.

The search for capacity

The sudden surge in demand for fast fashion that began last year has driven up air cargo rates from China and is raising concerns about a long-term capacity shortage.

“From what we have seen, this e-commerce (air) model is not sustainable, neither from a lucrative nor an environmental point of view,” said Guillermo Ochovo, director of 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 China to shorten transportation times to other regions.
Shein has started shipping products to US warehouses to speed up shipping times.

According to Baixiao founder Wang Yongqiang in a presentation at a Boeing air cargo forum in China in December, the growth in long-haul cargo aircraft supply cannot keep pace with the growth of cross-border e-commerce.

In its commercial market outlook for 2023, Boeing estimated China's air cargo fleet would triple to 750 planes between 2022 and 2042. Boeing declined to comment.

E-commerce companies are testing directly with airlines to get more capacity, according to the executive of a major air cargo company and Unique Logistics.

“We understand that Temu is looking to lease 12 widebody cargo aircraft. They are scouring the market for any aircraft they can find. We even received a request on our website,” Marc Schlossberg, Executive Vice President of Air Freight at Unique, he told Reuters.

Temu told Reuters in a statement that it is looking for sellers based in the United States and Europe “to reduce shipping distances and delivery times” to buyers.

Airlines and carriers are also contemplating how much capacity to reserve for Temu and Shein's businesses as shipments and prices fluctuate.

Niall van de Wouw, director of air freight at air and sea freight benchmarking platform Xeneta, said fast fashion brands are causing a “trade imbalance” with large amounts of cargo leaving Hong Kong but Freight volumes are “much lower on the return trip.” through the Pacific.”

The impact of China's new e-commerce giants is “a game-changer,” Schlossberg said. “They… are emerging as the most important drivers of the industry.”