China's e-commerce export engine is faltering, threatening profits for major online platforms like Temu, Shein, and AliExpress, Reuters reports. The business model, based on airfreighting $5 dresses from Chinese factories to shoppers worldwide, has already faced pressure since US President Donald Trump imposed tariffs on low-value packages and revoked tariff exemptions last year.
Data shows that the Middle East conflict has led to soaring logistics costs, exacerbating logistical pressures; industry insiders also say that freight companies like DHL Express are charging high fuel surcharges.
Analysis of Chinese customs data by Luxembourg-based consultancy Trade & Transport Group shows that China's low-cost e-commerce exports, which have boomed for the past six years, fell 10.9% in April to $9.81 billion, marking the fifth consecutive month of year-on-year decline.
Passing the cost on to consumers: Diana Qiao, a Temu women's clothing seller from Shenzhen, said she raised her prices by $2 because shipping costs per garment increased by an average of $1.
Ms. Qiao stated, "Ultimately, the burden is borne by the consumer." She added that the price increase was to protect profit margins, and although sales had declined slightly, she currently saw no need to change shipping arrangements.
Analysts and industry insiders say the decline in exports not only indicates cost pressures but also suggests that the era of rapid growth for large, low-cost shopping platforms may be over.
Frederick Horst, General Manager of the Trade and Transport Group, said they might ship more products in bulk to warehouses and then ship locally, rather than airfreighting all products directly from China.
He said, "Given the ratio of air freight costs to product value, this makes sense. If you're buying a 300-400 gram top, then air freight costs account for 60% of the total cost of the item."
Shein has been expanding its warehousing capacity in Europe, opening its third warehouse last month in Cannock, near Birmingham, UK.
A spokesperson for Alibaba, the parent company of AliExpress, told Reuters that despite fluctuations in global shipping costs, the company remains focused on maintaining value for money for consumers and providing a stable environment for both sellers and consumers.
Shein and Temu did not respond to questions about the impact of air freight costs on their business.
As their businesses mature, the platforms face weak demand.
It's certain that current export volumes are still much higher than two years ago, and export volumes in early 2025 significantly precede the imposition of US tariffs.
However, returning to the growth momentum of the past few years will be more difficult, as Shein and Temu have already captured a considerable market share, and soaring gasoline prices are squeezing household budgets in the US and Europe.
Furthermore, the EU will impose a €3 fee on low-value e-commerce parcels starting July 1st.
An executive at a Chinese freight forwarding company, who wished to remain anonymous, stated that air freight costs do have an impact, but freight platforms are currently experiencing a slowdown in growth, and overseas consumption is declining due to inflation.
This executive stated that he was not authorized to speak to the media.
Judah Levin, head of research at the freight platform Freightos, stated that due to high aviation fuel prices, even if the conflict with Iran ends, air freight prices are likely to remain high and will take some time to decline.
“If costs remain high or even rise further, companies may switch to other modes of transportation or postpone some shipments,” said Martin Habisreitinger, chief operating officer of Hellmann Worldwide Logistics’ air freight division.
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