The booming development of the e-commerce industry and the uncertainty of the duty-free policy for low-value parcels have led to a sharp increase in warehousing demand, driving the rapid development of the logistics and warehousing industry. Chinese e-commerce giants such as TEMU, SHEIN, Alibaba, and JD.com are increasing their warehouse space in the US. But can betting on overseas warehouses cope with the uncertainty of the duty-free policy?

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Driven by the booming cross-border e-commerce industry and the uncertain future of the duty-free treatment for low-value parcels, Chinese warehousing service providers are expanding their leasing operations in the US.

Analysts said that last year, Chinese logistics companies led the growth of major distribution centers in regions such as Southern California and central New Jersey in the US, mainly due to the success of online shopping platforms shipping from China.

However, the prosperity of cross-border e-commerce is not the only factor driving this trend. Industry insiders said that Chinese e-commerce platforms are also building their own logistics networks in the US to cope with changes in US trade policies.

According to a report by logistics real estate company Prologis, as of the third quarter of 2024, Chinese third-party logistics service providers and e-commerce companies accounted for 20% of the new warehouse leases in the US.

At the beginning of February, former US President Donald Trump imposed a 10% tariff on Chinese imports and canceled the "duty-free for low-value parcels" policy, which allowed parcels worth less than $800 to enter the US duty-free. Subsequently, Trump revoked the decision to cancel the duty-free policy for low-value parcels.

Many sellers ship directly from China to customers to maintain low prices, but the crackdown on low-value parcels has prompted these enterprises to store their goods in the US.

Currently, Chinese e-commerce giants such as TEMU, SHEIN, Alibaba, and JD.com are increasing their warehouse space in the US. For example, Cainiao, the logistics arm of Alibaba, said last year that it was accelerating its overseas expansion to meet the growing global demand for faster delivery services.

SHEIN and TEMU are also cooperating with third-party logistics companies to build warehousing and fulfillment service centers for faster logistics delivery. And at the end of last year, as part of its efforts to achieve localization and streamline the logistics fulfillment and delivery process, SHEIN opened its US warehouses to local sellers for free.

Robin Ming of Accelerated FS said that Accelerated FS has a 50,000-square-foot warehouse in Los Angeles and one in New Jersey in the US, and is currently considering adding another 80,000 square feet of warehouse space on the US East Coast. The purchasing demand of US e-commerce is continuously growing, so the logistics demand will inevitably continue to increase. Moreover, many of the companies that Accelerated FS cooperates with are Chinese companies selling products to US consumers.

Industry experts said that cooperating with third-party warehousing service providers can help Chinese retailers cope with complex and uncertain cross-border logistics. Joe Zhang, the founding partner of Shenzhen cross-border e-commerce consulting company Sailer Partners, said that if Trump cancels the duty-free policy for low-value parcels, the warehousing demand of Chinese retailers in the US will increase significantly.

According to data from Cushman & Wakefield, third-party logistics companies headquartered in Asia have leased nearly 22 million square feet of warehouse space, accounting for a quarter of all third-party logistics leases in the US. Jason Tolliver, President of Cushman & Wakefield's Americas Logistics and Industrial Services, said that in the past two years, Asian warehousing operators have taken advantage of lower sublease rents and higher warehouse availability. The growth of manufacturing and imports in other parts of Asia has driven the business expansion of Asian third-party logistics companies. We expect that for at least the next three years, Asian third-party logistics and demand will be an important driving force for the growth of demand in the US logistics market.

With the changes in global trade and manufacturing and the rapid growth of the cross-border e-commerce industry, the overall leasing business of third-party logistics companies has been growing every year. Cushman & Wakefield expects it to grow by 10% in the coming year.

CBRE also said that due to the expectation of Trump's tariff imposition, many enterprises have been importing products from Asia in advance, which has also stimulated an increase in the demand for warehousing facilities among Asian suppliers.

The US Customs and Border Protection estimates that from fiscal year 2018 to fiscal year 2021, 67.4% of low-value parcels came from China; in fiscal year 2024, the US Customs processed 136 million low-value parcels with a total value of $64.6 billion.

Canceling the duty-free policy for low-value parcels means that low-value Chinese parcels imported into the US will require additional documentation and tariffs before entering the US, in addition to the existing 20% tariff on Chinese imports and an additional 10 percentage points of tariff under Trump's executive order.

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WeChat official account: Cross-border E-commerce Logistics Baixiaosheng