Chinese e-commerce giants Temu and Shein – both of which ship extensively to Australia – have reportedly been sending such high volumes of cargo to key markets around the world via airfreight, that they are now driving up prices of airfreight which is left with limited capacity to serve other customers.

Together, Temu and Shein shipped around 9,000 tons of cargo worldwide every day, or approximately 88 Boeing 777 freighters completely filled, according to research from Cargo Facts Consulting in February.

Temu mainly sells clothing and housewares, while Shein which started as a fast-fashion retailer and has since expanded to consumer electronics and kitchen items, primarily sell Chinese brands.

According to logistics analytics company Xeneta, the May air cargo “average spot rate” from southern China to the US was around about A$7.15 per kilogram, rivalling rates that are typically seen during peak periods such as the holiday season.

While the May rates are still lower than the around A$15.05 to A$18.06 rates witnessed during 2020 and 2021 when the pandemic had its most damaging effects on global supply chains, the current high prices in airfreight are believed to be mainly driven by Shein and Temu’s insatiable shipping volumes.

Temu and Shein’s volumes are hurting local retailers in the countries where they are heading to, and Australia is no exception. As ChannelNews reported, Temu’s popularity is surging in Australia, with the Chinese online juggernaut shipping millions of dollars worth of goods during Black Friday, and their pricing makes a mockery of so-called discount pricing at the likes of Drummond Golf or even Kogan, because their prices are ridiculously cheap and the quality of their goods excellent.

As of December last year, Temu is believed to have amassed over 1.5 million customers in Australia with the Chinese business already having built out 48.2 million monthly average users in the US as of the end of October 2023.

With airfreight becoming a costly affair, international retailers are turning to cargo ships to source their goods. But even these prices are rising. In May this year, as Xeneta pointed out, the cost of shipping a 40ft container hit $6,552, roughly three times higher than the same period last year. Australian consumers are expected to pay more for European appliances and products manufactured in Europe, with the cost of shipping shooting up significantly because of ongoing problems in the Red Sea where ships are being targeted by the Houthis and the spiralling cost those 40-foot containers. Still sea cargo rates are far cheaper compared to sending goods by air.

But sea cargo will never match the speed of airfreight and hence for shorter delivery times, airfreight will remain crucial. To ease the pressure on airfreight, especially that coming out of China, new flights and capacity are being added. American firm Atlas Air launched a second air freight plane in partnership with YunExpress between China and the US. Others such as Korean Air are clear that they would “capitalize on the growing e-commerce demand from China by strengthening client partnerships and allocating capacity on key routes.”

In Australia, Shein’s revenue hit A$978.9 million and generated a 307.7 per cent increase in profits to A$10.6 million last year. Temu is also the most downloaded free app on Apple’s Australian App Store with around 1.26 million Australians shopping on the app each month. As their popularity grows, the demands that the two e-commerce giants place on airfreight capacity is only set to grow.