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Temu and Shein: Chinese providers are clogging up the air freight market

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Temu and Shein: Chinese providers are clogging up the air freight market

At Shein or Temu you usually only pay a few euros for a product. Business Insider; picture alliance / ZUMAPRESS.com | Rafael Henrique

Chinese online retailers Shein and Temu are causing bottlenecks in global air transport and higher freight costs. This was reported by the “Handelsblatt”.

According to a report by the US Congress from June 2023, both companies send around 600,000 packages to the USA and 400,000 to Germany every day.

Experts are unsure how long-term the business with low-cost providers will be. They fear that long-standing customers could be pushed out.

At the end of last year, Chinese demand for global air transport skyrocketed. As a logistics expert told the Reuters news agency, two companies are responsible for this: Temu and Shein. According to a report by “Handelsblatt“ This creates bottlenecks in air transport and higher freight costs.

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Temu and Shein send around a million packages to Germany and the USA every day

The Chinese companies Shein and Temu sell cheap goods that arrive at their destination just a few days after ordering. Both companies have recorded rapid growth in recent years. The largest sales markets include the European and US markets. The “Handelsblatt” reported on a report by the US Congress from June 2023, according to which both providers together send around 600,000 packages to the USA every day. For deliveries to Germany, the number is estimated at 400,000.

This development, which has been apparent since the end of last year, is now causing bottlenecks in global air transport. Freight rates have also increased significantly as a result. Freight rates are the price for the transport of freight goods. Added to this is the tense situation in the Red Sea, where the Houthi militia is attacking container ships.

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“The biggest trend affecting air freight is not the Red Sea, it is Chinese e-commerce companies like Shein and Temu,” said Basile Ricard, according to Handelsblatt. He is Director of Operations for Bollore Logistics’ China business. For this reason, freight planes could hardly transport additional goods if companies wanted to switch from ship to plane transport due to the tense situation.

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Low-cost providers want to expand their transport options

The fact that Shein and Temu are clogging up the air freight market is due to their business model. As the “Handelsblatt” reported, industry experts assume that both providers ship up to 5,000 tons of goods per day. That’s four to five times more than large tech companies such as Apple. The products, which usually only cost a few euros, are not sold through logistics centers or local warehouses. Shirts, kitchen appliances and toys are delivered directly to customers from China.

In the meantime, the companies want to expand their transport options. According to Handelsblatt, Temu, for example, is trying to lease aircraft itself. The company is also looking for intermediaries in America and Europe. Shein even already uses warehouses in the USA. According to the report, logisticians expect high demand to continue for a longer period of time. Nevertheless, according to the person responsible for Asia at a logistics company, he is not sure how long-term the business with the low-cost providers will be. This could potentially drive out long-standing, reliable customers.

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