The escalating popularity of Chinese e-commerce giants like Shein and Temu among American consumers is driving a significant increase in air cargo prices from China to the U.S. This surge in demand, especially during what is typically considered an off-peak season for cargo, is straining limited capacity and bucking the global downward trend in air cargo rates.

Unlike U.S. e-commerce giants that primarily ship from domestic warehouses, Shein and Temu directly ship goods from Chinese factories to U.S. consumers using air cargo. This has led to a 14% increase in air cargo rates from China to the U.S. compared to the same period last year, while the global average has seen an 8% decrease.

The rise of Chinese e-commerce platforms offering competitive prices and fast delivery times has caused capacity shortages, prompting concerns about meeting demand during peak seasons like the Christmas holiday period. To address this, cargo airline Atlas Air has increased its flights between the U.S. and China, partnering with Chinese freight forwarder YunExpress.

However, challenges persist as air freight capacity between China and the U.S. has not fully recovered to pre-pandemic levels. Additionally, reduced cargo capacity on planes due to fuel-saving measures and geopolitical tensions have further constrained capacity.

Despite efforts to add capacity and mitigate rising demand, competition for air cargo space between logistics companies and Chinese e-commerce firms continues to intensify. This competition, coupled with delays in ocean shipping caused by conflicts like the Red Sea conflict, is pushing prices even higher.

As the air freight market continues to soar, driven by the relentless growth of e-commerce shipments, logistics companies are grappling with the challenge of meeting demand amidst limited capacity, with no clear indication of when the situation may stabilize.