Dimerco’s Kathy Liu was recently interviewed on The Freight Buyer’s Club Podcast, and shared that Trans-Pacific air freight trade lanes will benefit from an extended demand boost as Chinese e-retailers seek to build market share in the U.S. She believes fast-growing Chinese retail platforms such as Temu and Shein will continue to rely on China to USA air freight in the short and medium-term as they differentiate their services from rivals by offering ‘on-demand’ product delivery to U.S. buyers direct from China. Listen to this Freight Buyer’s Club episode, hosted by Mike King.
Liu, VP of Sales & Marketing for Dimerco based on Shanghai, said “Every order Temu and Shein take, they ship directly from their warehouse in China. So, it means all those products need to move by air freight. Ocean freight will not be accepted by consumers.”
Consumers purchasing from the mostly Chinese merchants selling on the platforms receive all-in prices with everything included including transportation, so the end consumer has no need to pay any freight and there’s also no membership charge.
Liu said the shopping platforms were primarily focused on overseas markets with many products not even available to buy in China. “Their main focus is the U.S. market.”
According to data from ShipMatrix, Shein and Temu are each now shipping an estimated one million packages a day on average in the U.S., helping drive spot rates and demand out of Asia by freighter and bellyhold.
Air to ocean?
Liu said that, unlike Amazon and Alibaba, which generally utilize ocean freight shipments and store inventory in the U.S. for last-mile delivery, Temu and Shein had not invested heavily in U.S. warehousing. Instead, they sort deliveries into pallet load sizes in China and then air freight shipments for direct delivery to consumers from U.S. airports.
Temu has also started sea/air routes via Taiwan, Japan, and Korea into the US, resulting in freight rates from these alternative routes that are now exceeding those from mainland China – an unusual occurrence.
However, Liu predicts that once market share has been secured and data analysis is able to help better predict product demand ahead of time, more cost-effective logistics solutions will be developed by Chinese e-retailers.
“What we see is that maybe during the next two to three years, they will gradually reduce the China to USA airfreight volume and switch to ocean freight, especially after they get better big data analysis and understand what kind of product is most frequently ordered by consumers.”
Trans-Pac boosts
Liu told The Freight Buyers’ Club that e-commerce shipments, on top of strong demand for e-cigarettes and spare parts exports from China to the U.S., were helping keep trans-Pacific air cargo lanes buoyant in the second quarter of 2024, including China to USA air shipments.
“Space on flights from Beijing to the U.S. has been particularly tight in recent weeks,” she added, “while exports from China were also driving up volumes at key carrier transit hubs in places such as Taiwan, Singapore and Hong Kong.”
Q4 peak expected
On the Asia-Europe trade lane, Liu said the volatile situation in the Middle East and demand for the transportation of materials to France ahead of this summer’s Olympic Games was resulting in relatively tight space and the need for shippers to book in advance, or utilize alternative sea-air or all-rail options.
Liu was also upbeat about the general outlook for air cargo for the rest of the year, citing semi-conductor and high-tech demand and a generally improving economic picture. “I’m actually very positive for the rest of 2024,” she said. “We are quite confident for the coming months. We are expecting a peak during the final quarter.”
Check out the full episode, which also features leading global air freight journalist Eric Kulisch from Freight Waves.
Explore Solutions with Dimerco Express Group
Visit this page to view other episodes of the Dimerco-sponsored Freight Buyer’s Club podcast, which is produced for anyone with a professional interest in international trade, shipping, procurement, logistics and air cargo. The podcast features leading decision-makers, analysts, journalists, operators, and shippers who share their take on current freight and logistics markets and the challenges and opportunities.
Do you need help navigating today’s China to USA air freight market or any global logistics challenge? Reach out to Dimerco for solutions and expert guidance. Our team is ready to navigate these challenges and ensure resilience against potential supply chain risks.
