PRESS RELEASE
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Air cargo demand will enjoy a sustained boost as Chinese e-retailers such as Temu and Shein attempt to establish sizeable market share in the US. • However, following a strategy previously trailblazed by Amazon, more sustainable ocean-based supply chains will eventually emerge, Dimerco Express Group’s Kathy Liu tells the latest episode of The Freight Buyers’ Club podcast. |
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May 16, 2024Trans-Pacific air freight trade lanes will benefit from an extended demand boost as Chinese e-retailers seek to build market share in the US, according to one leading 3PL executive. Shanghai-based Kathy Liu, Vice President of Global Sales and Marketing, Dimerco Express Group, believes fast-growing Chinese retail platforms such as Temu and Shein will continue to rely on air freight in the short and medium-term as they differentiate their services from rivals by offering ‘on-demand’ product delivery to US buyers direct from China. “Every order they take, they ship directly from their warehouse in China,” she told The Freight Buyers’ Club podcast (video available for publication here). “So, it means all those products need to move by air freight. Ocean freight will not be accepted by consumers.” Consumers purchasing from the mostly Chinese merchants selling on the platforms receive all-in prices with “everything included including transportation, so the end consumer has no need to pay any freight and there’s also no membership charge,” she said. Liu said the shopping platforms were primarily focussed on overseas markets with many products not even available to buy in China. “Their main focus is the US market,” she added. According to data from ShipMatrix, Shein and Temu are each now shipping an estimated one million packages a day on average in the US, helping drive spot rates and demand out of Asia by freighter and bellyhold. Air to ocean? Liu said that, unlike Amazon and Alibaba, which generally utilise ocean freight shipments and store inventory in the US for last-mile delivery, Temu and Shein had not invested heavily in US warehousing. Instead, they sort deliveries into pallet load sizes in China and then air freight shipments for direct delivery to consumers from US airports. Temu has also started sea/air routes via Taiwan, Japan, and Korea into the US, resulting in “freight rates from these alternative routes that are now exceeding those from mainland China – an unusual occurrence.” However, she predicts that once market share has been secured and data analysis is able to help better predict product demand ahead of time, more cost-effective logistics solutions will be developed by Chinese e-retailers. “What we see is that maybe during the next two to three years, they will gradually reduce the airfreight volume and switch to ocean freight, especially after they get [better] big data analysis and understand what kind of product is most frequently ordered by consumers.” Trans-Pac boosts Lui told The Freight Buyers’ Club that e-commerce shipments, on top of strong demand for e-cigarettes and spare parts exports from China to the US, were helping keep trans-Pacific air cargo lanes buoyant in the second quarter of 2024. Space on flights from Beijing to the US has been particularly tight in recent weeks, she added, while exports from China were also driving up volumes at key carrier transit hubs in places such as Taiwan, Singapore and Hong Kong. Q4 peak expected On the Asia-Europe trade lane, Liu said the volatile situation in the Middle East and demand for the transportation of materials to France ahead of this summer’s Olympic Games was resulting in relatively tight space and the need for shippers to book in advance, or utilise alternative sea-air or all-rail options. Lui was also upbeat about the general outlook for air cargo for the rest of the year, citing semi-conductor and high-tech demand and a generally improving economic picture. “I’m actually very positive for the rest of 2024,” she said. “We are quite confident for the coming months. “We are expecting a peak during the final quarter.” The full episode of The Freight Buyers’ Club is out now out on all podcast platforms. Or follow the links below: The FBC website where you can subscribe: https://www.thefreightbuyersclub.com/podcast/trans-pacific-trends-and-challenges-insights-from-freight-industry-experts/ YouTube: https://youtu.be/hKNx47kKm1w Spotify: https://open.spotify.com/episode/5625wI4uqsg1yc20szzvPn?si=c90b98bc33b04096 Audible: https://www.audible.co.uk/pd/B0D45TR9D7?action_code=ASSGB149080119000H&share_location=pdp |
