Fashion's air dominance: The swift ascent of fast-fashion online retailers like Shein and Temu is shaking up the global air cargo sector, as they increasingly compete for limited air-cargo capacity to attract customers with speedy delivery times, according to a Reuters report.

Shein, Temu, and TikTok Shop, which recently ventured into online retail in the US, predominantly ship their products directly from factories in China to consumers via air, each in individually addressed packages.

Rising shipping demand

Their surging popularity - with Shein and Temu alone sending nearly 600,000 packages to the United States daily, as per a June 2023 report by the US Congress - is driving up air-freight expenses from Asian hubs such as Guangzhou and Hong Kong. This surge is erasing off-peak seasons and causing capacity shortages.

Basile Ricard, from freight forwarder Bollore Logistics SDSC.CI, remarked, "The most significant trend affecting air freight currently is not the Red Sea, but rather Chinese e-commerce companies like Shein or Temu."

According to data compiled by Cargo Facts Consulting, Temu ships approximately 4,000 tonnes a day, Shein 5,000 tonnes, Alibaba.com 1,000 tonnes, and TikTok 800 tonnes. This equates to roughly 108 Boeing 777 freighters daily, the consultancy noted.

Fashion market leader

Fuelled by strong demand for their affordable clothing items like $10 tops and $5 biker shorts, Shein alone captures one-fifth of the global fast-fashion market share by sales, propelling growth in China's e-commerce sector.

Fast fashion now constitutes half of China's total cross-border e-commerce shipments, consuming about one-third of global long-haul cargo aircraft capacity, according to Baixiao.com.

The expansion of Shein and Temu is squeezing out space for other industries on air freighters, particularly as global companies seek alternative logistics options due to disruptions in traditional routes like the Red Sea crisis.

Demand for air freight from fast fashion skyrocketed in the latter half of the previous year, multiple sources revealed.

Tech versus fashion

A German logistics insider noted that even tech giants like Apple transport a maximum of 1,000 tons daily, suggesting that the escalating cargo demand from fast fashion could displace traditional long-term customers vying for limited air capacity.

Certain air-freight carriers are responding to the heightened e-commerce demand by offering additional charter capacity, although this is already heavily booked for the long term, according to a spokesperson for German logistics firm Schenker.

Both Shein and Temu are now exploring sea freight options due to the high costs associated with air freight. Shein has begun sending goods to warehouses in the U.S. to expedite shipping times.

The sudden surge in demand from fast fashion has driven up air-cargo rates from China and raised concerns about long-term capacity shortages.

Boeing's China estimate

Boeing estimated in its 2023 commercial market outlook that China's air cargo fleet would more than triple to 750 aircraft between 2022 and 2042.

E-commerce firms are now directly engaging airlines to secure more capacity, with Temu reportedly seeking to lease 12 wide-body freighters to reduce shipping distances and delivery times.

Airlines and freight forwarders are grappling with how much capacity to allocate to Shein and Temu's businesses amid fluctuating shipments and prices.

The emergence of China's new e-commerce giants is deemed "game-changing" by industry experts, as they have become the most influential drivers in the sector.

(With Reuters Inputs)