The Chinese e-commerce sellers Temu and Shein, are upending the air cargo market. Cheap clothing and household goods bound for the US and Europe are gobbling up aircraft space, stoking fears of an eventual capacity squeeze.

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While China has held the crown as the world’s low-cost manufacturing giant for some time, Shein and Temu are approaching previously unimaginable levels. Shein is currently selling to over 150 countries, while Temu has covered 40 and growing. 

Both companies employ an on-demand business model where orders are placed to suppliers to be delivered in days. Real-time demand data allows for timely replenishment as needed and limits the need for storage and inventory risk.  

Competition for aircraft space has ballooned in the south of China, the heart of the country’s manufacturing hubs. In June, prices were up a considerable 40% compared to 2023, which is a rarity for a summer month. It is estimated that Chinese e-commerce firms now consume over 30% of cargo space on critical routes out of Asia. 

In a typical context, airfreight is reserved for high-value items and perishable goods. But demand is so great for Shein and Temu’s low-cost items that air routes are now sending purses, T-shirts, pots, and pans. In each of the first five months of 2024, exports out of Hong Kong International Airport registered double-digit increases, and May was up a staggering 30% year-over-year. 

Freight forwarders are sounding the alarm that space will be tight during the normal fourth-quarter retail rush. Many forwarding companies are nudging manufacturers and retailers to lock in higher-than-usual rates now to avoid unpleasant surprises come October. Extra capacity will be a premium if not unattainable in 2024. 

The air cargo business is up broadly for the year. The International Air Transport Association estimates a rise of 12.7% in global airfreight demand over the first four months of the year, with Asia-Pacific notching a 14% gain alone in April. 

Other factors driving air cargo activity are ocean shipping bottlenecks, driven largely by disruptions in the Red Sea, vessel capacity shortages, and port congestion in a handful of key markets.

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