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China’s low-cost e-commerce sector is facing growing challenges as higher air freight expenses and weakening consumer demand in Western markets put pressure on major online retailers such as Temu, Shein, and AliExpress. The industry, which built its success on shipping inexpensive products directly from Chinese factories to overseas buyers, is experiencing a significant slowdown in 2026.
The sector was already dealing with obstacles after U.S. President Donald Trump introduced new tariffs and removed customs exemptions for low-value imports. Now, rising jet fuel prices linked to the ongoing Iran conflict are increasing transportation costs, making international deliveries more expensive for sellers and platforms alike.
Logistics companies, including DHL Express, have implemented higher fuel surcharges, forcing many merchants to adjust their pricing strategies. Shenzhen-based apparel seller Diana Qiao said she increased product prices by approximately $2 after shipping costs rose by about $1 per item. While this move helped protect profit margins, it has also contributed to a slight decline in sales.
Recent trade data highlights the industry’s challenges. According to an analysis of Chinese customs figures by Trade and Transport Group, China’s low-cost e-commerce exports fell 10.9% year-over-year in April, reaching $9.81 billion. This marked the fifth consecutive month of declining export values, signaling that the rapid expansion enjoyed by platforms like Temu and Shein may be slowing.
Industry experts note that companies are increasingly shifting inventory to overseas warehouses instead of relying solely on direct air shipments from China. Shein, for example, continues to expand its European logistics network and recently opened another warehouse in the United Kingdom.
At the same time, inflation and rising fuel prices are reducing consumer spending power across the United States and Europe. Additional regulatory measures, including the European Union’s planned €3 fee on low-value e-commerce parcels, are expected to create further challenges.
Analysts believe air freight rates could remain elevated for an extended period due to persistent jet fuel costs. If transportation expenses continue rising, many e-commerce businesses may rely more heavily on sea freight, local warehousing, and alternative logistics solutions to maintain competitiveness in the global online retail market.
