News / Hede bucks e-commerce trend as it launches China-US express service

Photo: Hede Shipping

Despite the slump in Chinese e-commerce exports to the US, Hede Shipping, owned by Hebei Port Group, went ahead with is new express container service to the west coast last week.

Operating bi-weekly with a string of three ships of 3,000-5,000 teu, the service offers a 14-day transit between Nansha and the West Basin container terminal at Los Angeles.

It will leverage wheeled operations and a dedicated chassis pool, and management has pledged to have expedited containers ready for pick-up within 24 hours of discharge.

Notwithstanding US government moves to stymie parcel imports from China, Hede expressed confidence that “the e-commerce market is here to stay”.

According to official data from China, its e-commerce exports to the US dropped 65% in Q1, and the end of de minimis exemption on 2 May triggered a slump in air cargo charters between the two countries. Indeed, May saw a 43% fall in US imports of e-commerce from China.

While the end of de minimis dealt a heavy blow to transpacific airborne parcel volumes (last year e-commerce accounted for 50% of airfreight volume from China to the US), it accelerated a trend that had already begun. Last year Chinese e-commerce giant Temu was courting US online sellers, which culminated in the full opening of its marketplace to merchants in November. Simultaneously the Chinese firm was building up its US warehousing capacity to offer narrower delivery windows for domestic shipments than those for its standard airfreight shipments. In the main these are stocked with inventory of popular items arriving in containers.

In its pursuit of US-based sellers, Temu stressed that their orders could be moved from its US warehouses to consumers in as little as a day.

John Haber, chief strategy officer of Transportation Insight, said for many companies the end of de minimis ushered in profound changes in their supply chain and fulfilment, as it pushed up costs.

Meanwhile, Amazon and Walmart have ramped up their ocean shipping capabilities and are offering them to third-party shippers. In early June, Amazon, which first ventured into the ocean cargo sector in 2017, registered its Amazon China arm to operate as an ocean freight forwarder in the US to provide container services to other companies.

According to supply chain financing platform FreightAmigo, this opened the door to a possible integration of ocean shipping into its Fulfillment by Amazon service, reduce costs, improve efficiency, attract Chinese suppliers to US-based sellers, and compete more effectively with other e-commerce platforms.

Last August Walmart made its ocean shipping service available to all sellers using its fulfilment service to move goods from China to its US fulfilment network.

And while it explicitly targets e-commerce, Hede Shipping’s new operation will appeal to other users.

“We are using express services, and it’s for much more than e-commerce. It also includes clients that want to speed up their cash conversion cycle and is a good option for higher-value goods,” said Brian Bourke, chief commercial officer of Seko Logistics.

Nor is Hede the only company that sees merit in express container service across the Pacific. Zim discontinued its China-Los Angeles Central China Xpress service in April after bookings had slumped 50% following the escalation of US tariffs on Chinese goods to 145%. However, in late May, it reinstated the service, following a sharp rise in container rates in the sector to $7,000 per feu.

Cathy Morrow Roberson, founder and head analyst of Logistics Trends & Insights, noted that express container services had been around for a while.

“I wouldn’t exactly call it the holy grail, rather another option for e-commerce providers to consider when shipping from overseas,” she added.