Will the booming demand for low-cost goods reshape the future of shipping?

  • Temu and Shein are significantly boosting parcel delivery volumes in the U.S.
  • Each company is providing around 900,000 packages daily, leveraging the ‘de minimis’ exemption.
  • Lawmakers are scrutinizing the de minimis exemption, which could impact future volumes.
  • UPS and other carriers are benefiting from the surge in lightweight shipments.
  • Temu and Shein negotiate favorable shipping rates due to their high volume.
  • Delivery times for Temu and Shein can be lengthy, affecting customer experience.
  • UPS plans to implement a per-pound fee on imports to mitigate revenue losses.
  • Smaller carriers are also gaining from the increased delivery density provided by these e-commerce giants.
  • Demand for low-cost goods from Temu and Shein is expected to remain strong despite regulatory pressures.

The rapid growth of Temu and Shein has injected new life into the parcel delivery market, with each e-commerce platform contributing approximately 900,000 packages daily in the U.S. as of July, according to ShipMatrix data. This surge is largely due to their use of the ‘de minimis’ exemption, which allows for lower shipping costs and attracts more customers, ultimately increasing delivery volumes for carriers. However, this exemption is under scrutiny from lawmakers and Customs and Border Protection, raising concerns about its sustainability. Experts suggest that parcel carriers, particularly smaller and regional ones, could face significant challenges if the exemption changes. nnCurrently, the influx of packages is helping carriers like UPS recover from a slump in demand following the COVID-19 pandemic. In the second quarter of 2024, UPS reported a 0.7% year-over-year increase in average daily volume, largely driven by new e-commerce customers, including Temu and Shein. These companies are not only boosting UPS’s volume but also utilizing FedEx and the U.S. Postal Service for deliveries. nnIn exchange for their high shipping volumes, Temu and Shein are able to negotiate favorable shipping rates, which helps them maintain competitive pricing on their products. However, their cost-focused shipping models result in longer delivery times, with Temu’s standard shipping taking between six to 22 days and Shein’s between 10 to 13 days. nnDespite the growth in volume, UPS has seen a decline in per-package revenue, prompting the company to introduce a per-pound fee on imports from certain countries, including China. This move aims to offset the financial impact of lower-value shipments from Temu and Shein. nnThe low-cost e-commerce boom is also benefiting smaller carriers, as the increased delivery density allows them to improve their service offerings and attract more domestic customers. While there are calls for tighter regulations on low-cost imports, experts believe that demand for Temu and Shein products will remain strong unless significant changes are made to the de minimis threshold. However, any adjustments in their supply chain in response to new regulations could lead to higher prices for consumers, potentially driving them to competitors like Amazon.·

Factuality Level: 8
Factuality Justification: The article provides a detailed analysis of the impact of Temu and Shein on the parcel delivery market, supported by data and expert opinions. It avoids sensationalism and presents information in a structured manner. However, some sections could be seen as slightly tangential, and there are minor instances of bias in the interpretation of expert quotes.·
Noise Level: 8
Noise Justification: The article provides a detailed analysis of the impact of Temu and Shein on the parcel delivery market, supported by data and expert opinions. It discusses the implications of regulatory scrutiny and the dynamics of shipping costs, demonstrating intellectual honesty and relevance to the topic. However, it could benefit from more actionable insights or solutions for the challenges faced by carriers.·
Financial Relevance: Yes
Financial Markets Impacted: The parcel delivery market and companies like UPS and FedEx are impacted by the shipping volume from Temu and Shein, which affects their revenue and pricing strategies.
Financial Rating Justification: The article discusses the financial implications of e-commerce growth on parcel carriers, including revenue changes and market strategies, making it relevant to financial topics.·
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: The article discusses the rise of e-commerce companies Temu and Shein and their impact on the parcel delivery market, but it does not mention any extreme events that occurred in the last 48 hours.·

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