Air Freight Capacity Challenges Driven by E-Commerce Boom
Chinese e-commerce giants Shein and Temu are experiencing rapid growth, putting pressure on the global air freight market. With Temu now serving 40 countries and Shein delivering to over 150 countries, these companies are significantly influencing air cargo demand with their direct-to-consumer shipping model.
Rising Air Freight Demand from E-Commerce Expansion
Currently, Shein is shipping approximately 5,000 tonnes, Temu 4,000 tonnes, TikTok 800 tonnes, and Alibaba 1,000 tonnes, equivalent to 108 Boeing 777 flights daily. This surge has led e-commerce businesses to occupy more than 30% of available air freight capacity, especially on routes from Asia to the US and Europe. As a result, air cargo rates from southern China increased by 40% in June 2024 compared to the same period in 2023, a surprising rise for the typically slower summer months.
The Challenges of Soaring Air Freight Costs
In response to growing demand, some airlines have expanded their charter services, while Temu is actively leasing 12 freighters and seeking additional aircraft. Despite this, the profitability of e-commerce companies relying heavily on air freight remains uncertain due to high operating expenses like fuel, maintenance, and leasing costs. As costs rise, Shein and Temu are exploring sea freight options and establishing local warehouses outside of China to improve efficiency and cut costs.
Strategies to Optimize E-Commerce Logistics
To address these challenges, e-commerce giants are shifting towards a more balanced logistics strategy. Sea freight is increasingly being used for high-demand, predictable products that can be stored at major distribution centres across Europe and the US. Air freight, on the other hand, remains the best option for trending, fast-moving items that need to reach consumers quickly.
Another strategy involves better collaboration with suppliers by sharing real-time sales data, inventory levels, and demand forecasts. This enables manufacturers to align production with actual market demand, reducing overproduction and costly excess inventory.
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