Due to the surge in e-commerce demand, the volume of cross-border e-commerce parcels has also increased. Reports indicate that Shein and Temu are sending over one million packages daily to US consumers, which significantly impacts the logistics service market. Previously, the US Customs and Border Protection (CBP) not only suspended multiple customs brokers from participating in the T86 program (which allows duty-free entry of goods valued under $800) but also strengthened the supervision of incoming e-commerce goods. Despite some challenges faced by cross-border e-commerce parcels, the situation is improving, and platforms like Temu and Shein are gradually resuming their freight shipments from China to the US. With the peak season for stockpiling starting in September, freight volume is expected to increase significantly, creating huge market demand for logistics service providers and driving innovation and transformation across the industry.

1. Emergence of Start-Up Logistics Companies

When discussing e-commerce logistics, it’s easy to think of traditional giants like Amazon, FedEx, and USPS. However, amid the growing delivery needs of Chinese e-commerce giants Shein and Temu, a wave of American start-up logistics companies has entered the market.

For example, Hailify, founded in 2017, originally served as an app for ride-hailing drivers, helping them manage work across multiple platforms. However, with changes in the market environment, Hailify seized the opportunities brought by emerging e-commerce and successfully transitioned into a parcel delivery company. Today, Hailify is an important link between Chinese sellers and American consumers.

In addition to Hailify, many other start-ups have found their footing in this wave. PiggyExpress, founded in 2021, primarily serves Temu. The company operates flexibly, using temporary locations like parking lots as pick-up points for drivers to maintain low operational costs. UniUni, based in Vancouver, Canada, has raised over $100 million since its founding in 2019, with its rapid growth largely due to orders from Shein and Temu. GOFO Express, founded in 2022, quickly became a primary last-mile delivery service provider for Temu in the US. Similarly, SpeedX, also founded in 2022, derives 60% of its business from international retailers like Shein and Temu, using these orders as a foundation to expand into new markets.

Notably, UniUni has grown from an unknown entity to a leading player in Canada, delivering over 20 million packages annually and handling deliveries for Shein and Temu in Canada. It also counts Walmart and Wish among its major clients. UniUni's success can be attributed to its strategic grasp of opportunities, riding the wave of e-commerce growth in North America and the rise of Shein and Temu. This enabled it to disrupt the established courier landscape in North America.

At the start of the pandemic, when millions were forced to stay home, e-commerce sales surged, putting immense pressure on global delivery networks. UniUni was a minor player in the competitive restaurant delivery field when a logistics company that transports e-commerce products from China to Canada noticed one of its contract vehicles in Vancouver. They inquired if UniUni could help deliver some packages locally, to which UniUni agreed. This one-time project quickly evolved into a long-term partnership. Since then, UniUni decided to challenge existing courier companies using a new model—leveraging networks like Uber for last-mile delivery—and successfully grew its business to become a last-mile delivery provider for fast fashion giants Shein and Temu in North America, attracting investor attention.

The success of these start-ups lies in their ability to seize market demand opportunities, quickly adapt to market innovations, and seek potential strategic partners to stabilize business volume and leverage their brand power for rapid market expansion. Their asset-light model, relying on temporary workers and flexible temporary locations to maintain low operational costs, allows them to quickly adapt to changing market demands and compete on price with traditional logistics giants. However, this model also brings potential risks, such as service quality instability and employee rights protection.

2. Traditional Logistics Giants Actively Transform Strategies

In the face of huge opportunities brought by emerging e-commerce, traditional logistics giants are actively strategizing to seek transformation alongside the innovative start-ups.

For example, USPS is currently Shein’s primary delivery partner in the US, reportedly offering up to a 70% discount. This significant discount reflects USPS's aggressiveness in the parcel delivery business and Shein’s bargaining power as a major client. OnTrac, the fourth-largest courier company in the US, is working hard to expand nationwide, with Shein and Temu becoming some of its largest customers. This collaboration not only brings substantial business volume to OnTrac but also provides valuable experience in competing with giants like UPS and FedEx.

Unlike the two companies mentioned above, UPS has taken a different approach by providing return services for Shein through its subsidiary Happy Returns. Happy Returns CEO David Sobie revealed to the media that Shein has become one of its top five revenue clients. Additionally, UPS is negotiating potential return service cooperation with Temu. This strategy, focused on specific segments, allows UPS to find its niche market in fierce competition.

3. The "Price War" in Courier Services

Despite the increasing volume of parcels driven by the development of cross-border e-commerce platforms, Shein and Temu bring great opportunities as well as significant challenges to the US logistics industry.

Firstly, there is price pressure. These two companies are known for their tough price negotiation tactics, which may squeeze the profit margins of logistics service providers. Reports indicate that Shein’s contract with USPS includes up to a 70% discount, a level that not only impacts large logistics companies but poses a severe challenge to start-ups with thin profit margins.

Secondly, as consumer demand for delivery timeliness grows, low prices alone are no longer sufficient to secure orders. The success of Shein and Temu in the US market is partly due to consumers’ willingness to accept longer delivery times in exchange for lower prices.

However, recent trends indicate that accuracy and timeliness are becoming increasingly important considerations for these companies when selecting logistics partners. Reports suggest that Temu is even considering turning to large carriers like FedEx to reduce customer complaints about delivery delays and errors. Compared to start-up logistics companies, traditional logistics giants like FedEx, UPS, and USPS can offer more stable and reliable services due to their extensive infrastructure and long-established networks.

In summary, while partnering with e-commerce giants like Shein and Temu can bring significant short-term gains, logistics start-ups need to handle this dependence carefully to ensure long-term business stability. By optimizing service quality and cost control, actively expanding a diversified client base, start-ups can maintain flexibility while building sustainable business models, thereby securing a competitive edge in the fiercely competitive logistics market. Which companies will be able to balance short-term gains with long-term strategies to achieve lasting success in the future? Let’s wait and see!

END

WeChat Official Account: Cross-border E-commerce Logistics Baixiaosheng