Temu and Shein's Growth Fuels Parcel Delivery Boom Amid Regulatory Scrutiny
Sep/09/2024
The rapid rise of e-commerce giants Temu and Shein is providing a much-needed boost to the U.S. parcel delivery market, with both companies generating around 900,000 daily packages in July alone, according to ShipMatrix data. Their success hinges on low-cost shipping, aided by the "de minimis" exemption, which allows goods under $800 to enter the U.S. with minimal tariffs and customs duties. However, this cost-saving strategy faces increasing scrutiny from lawmakers and U.S. Customs and Border Protection, threatening the exemption's future. Parcel carriers like UPS and FedEx have benefited from the surge in lightweight shipments, although profitability remains a concern as low-value shipments compress margins. UPS saw a 0.7% increase in daily U.S. volume in Q2 2024, driven by its low-cost SurePost service, but per-package revenue has fallen. As smaller carriers also rely on these shipments to improve delivery density and cover costs, any regulatory changes could disrupt this growth. The chart below shows American Customer Satisfaction Index (ACSI) scores for consumer shipping companies in the U.S. from 2017 to 2024, highlighting consumer sentiment as the parcel delivery industry adapts to changing market dynamics.
