TikTok isn’t just for showing off your Nyquil chicken, teaching people how to get points from Delta when your luggage is delayed or making videos about eating frozen honey. It’s turned into an e-commerce phenomenon.
And that’s creating a challenge for global air cargo as Shein, Temu and ByteDance’s TikTok Shop try to ship products out of China, especially to consumers in the U.S.
Shein and Temu together send almost 600,000 packages to the U.S. every day, according to a June 2023 report by the U.S. Congress — is boosting air-freight costs from Asian hubs such as Guangzhou and Hong Kong, making off-peak seasons almost disappear and causing capacity shortages, the sources said.
“The biggest trend impacting air freight right now is not the Red Sea, it’s Chinese e-commerce companies like Shein or Temu,” said Basile Ricard, director of Greater China operations at freight forwarder Bollore Logistics.
Reader Ben wants to know whether this cargo demand translates into more passenger flights from Asia (especially Hong Kong) to the United States?
Does an industry trend like this make it more profitable for US airlines to add flights to Hong Kong or other places in Asia? I assume it has little impact on flights to China since those are capped at a very low-level by legal restrictions right now.
There’s no question that cargo matters for long haul widebody flights! For years it sustained a United Airlines San Francisco – Nagoya flight (Toyota) which was great for award availability.
However for small e-commerce sales from China to the United States I would not expect significant lift to flights between the U.S. and Asia.
Instead, I assume that a lot of that e-commerce is actually being shipped to a broker in either Canada or Mexico and then trucked into the United States in order to avoid import duty.
These are small dollar, individually-addressed packages. Items packaged individually worth less than $800 won’t pay import duties coming into the U.S. from Canada or Mexico, and since they’re immediately leaving those countries they won’t pay in Canada or Mexico either. (There’s some nuance to it, but that’s the general gist.)
How everyone evades customs on US imports. pic.twitter.com/VRtrtW1c1M
— Aaron Rubin (@AaronandML) February 22, 2024
So I suspect this helps Asia flying to and from Canada more than the U.S. But it doesn’t seem like it’s going to benefit U.S. air travel, because of U.S. import duties. I have several readers far more knowledgeable about such issues than I am and would love to know if this impression is off.
Hi Gary,
Packages entering directly from the PRC qualify for the de minimis exemption of $800.
USMCA was important for raising the (much lower) equivalent to the de minimis rule for packages going TO Canada from the US, which was important to US e-commerce businesses, but the $800 de minimis value is due to the Trade Facilitation and Trade Enforcement Act of 2015 and is not Canada/Mexico specific.
I’ve received packages from a lot of different countries. There are several different strategies that China shippers use. Sometimes they ship through a third country with favorable shipping to the USA like Tuvalu (A second label is stuck over the first one). More often, the packages seem to be bulk packed and shipped to a receiving company in the USA which will break down the package and send the individual packages to individual customers. Some eBay shippers use an express company set up within the eBay system to get packages to the customer. I have received some packages shipped the first way many months later.
“I have received some packages shipped the first way many months later.”
@jns, those packages that took weeks/months to arrive obviously weren’t shipped by air, so they had little to do with air cargo.
The goods are actually individually packaged in China (and labeled with ups/fedex labels) overseas then share a ride over in ULD’s direct to the major airport closest to the end user. When it gets here they will then hand it off to UPS for last mile delivery. Since its for individual customer orders it will avoid the 5-250% import tax if under $800 the same way inbound travelers do it. The transpacific cargo lane is already pretty jam packed and takes 2+ weeks when small fish like me move cargo. Last month my cargo rode in on the same JL 787 KIX-LAX that my family was on, haha.