Temu and Shein packages are flooding delivery networks. Will the surge persist?

 

Temu and Shein's rapid rise to prominence has given the parcel delivery market a shot in the arm.

In July alone, the e-commerce marketplaces each provided carriers with about 900,000 packages daily in the U.S., according to ShipMatrix data shared with Kapoklog .

 

The two companies' shipments enter the country through a streamlined supply chain process that leans on the "de minimis" exemption. This helps keep prices low to draw in more shoppers - which generates more volume for carriers to deliver.

 

But mounting lawmaker scrutiny and Customs and Border Protection crackdowns are threatening the exemption's future, at least in its current state. Parcel carriers are counting on Temu and Shein to adapt, given how intertwined some industry players have become with the two companies, experts interviewed by Supply Chain Dive said.

"I do think the smaller carriers and regional carriers would be greatly impacted by a disruption to the volume," said Nate Skiver, founder of parcel consultancy LPF Spend Management.

 

'Explosive' growth catches UPS' attention

For now, the boom is helping carriers regain volume momentum since the COVID-19 pandemic's home delivery rush subsided.

After more than two years of sagging volume, UPS finally shook off its demand slump in the second quarter of 2024. Average daily U.S. volume went up 0.7% year over year in Q2 for the carrier, aided by heightened interest for its low-cost SurePost service.

 

UPS grows U.S. volume for first time since Q4 2021

Year-over-year growth for average daily package volume in UPS' U.S. Domestic segment.

 

CEO Carol Tomé said in a July earnings call that e-commerce companies operating a different shipping model than traditional UPS users helped drive this rebound.

"There were two new e-commerce customers that came into our network, and you can imagine who they are," Tomé said. "These are new e-commerce shippers in the United States whose volume has been quite explosive."

Temu and Shein weren't mentioned in the call by name, but both companies use UPS, and experts interviewed by Supply Chain Dive said they are driving the carrier's surge in lightweight volume.

 

"It's the only two retailers that could have enough volume to actually impact their results like that," said Alan Amling, an assistant professor of practice at the University of Tennessee and former VP of corporate strategy for UPS.