China's Cross-Border E-Commerce Under Pressure
Chinese cross-border e-commerce exports are suffering significant losses as rising aviation fuel costs and weakening demand in Western markets take their toll. The Iran war has emerged as a key driver of these financial setbacks for major players like Temu, Shein, and AliExpress. According to China's customs data, overseas sales in the low-cost online export sector fell by 10.9% in April, reaching $9.81 billion. This marks the fifth consecutive month of year-over-year declines.
Despite this negative trend, overall trade volumes remain higher than two years ago. However, returning to previous growth rates will be extremely challenging, as the conflict in Iran keeps jet fuel prices at record highs. Global carriers such as DHL Express are raising their rates, further compounding the difficulties.
Adapting to a New Reality
A representative from a Shenzhen-based company selling women's clothing on Temu, identified only as Qiao, noted that air freight costs have risen by an average of $1 per unit, forcing them to increase retail prices by $2. Shipping a lightweight top from China now accounts for roughly 60% of the product's total cost. In response, platforms are shifting toward bulk sea or rail deliveries to regional warehouses in destination countries.
- Shein has opened its third mega-warehouse in Cannock, near Birmingham, signaling efforts to adapt to the changing environment.
- Representatives from Shein and Temu have declined to comment on losses related to air freight.
If the financial burden continues to grow, businesses will have to either abandon fast air routes entirely or deliberately delay delivery times to consolidate shipments. — Martin Habisreitinger
Adding to the sector's woes, Western governments have tightened controls. Last year, U.S. President Donald Trump introduced new customs tariffs and eliminated duty-free exemptions for low-value parcels. Starting July 1, the European Union plans to impose a special fee of €3 on all low-cost e-commerce parcels, and from October 1, Moldova will begin collecting a 20% value-added tax on all purchases from foreign online platforms.
The current situation presents serious challenges for Chinese e-commerce platforms, which have traditionally relied on low prices and fast delivery. Rising transportation costs and new customs restrictions from Western nations could significantly undermine their competitiveness. To survive amid growing competition and shifting market conditions, these companies will need to adapt their strategies. Developing innovative logistics solutions and optimizing expenses will be critical to success in this tough economic landscape.