In 2024, the cross-border e-commerce industry has experienced unprecedented rapid growth, particularly in Shenzhen, China, where the total import and export volume of cross-border e-commerce in the first quarter exceeded 100 billion yuan, surging by more than 90% year-on-year. This remarkable figure not only demonstrates the vitality of cross-border e-commerce but has also driven the rapid development of related industries, especially the cross-border logistics market.
The Rise of Cross-Border E-Commerce
With the continuous expansion of the global consumer market and the widespread adoption of e-commerce, cross-border commerce has emerged as a new business model, gradually becoming an important component of international trade. The growing consumer demand for foreign goods has encouraged many companies to leverage e-commerce platforms to expand their international sales channels. Particularly driven by major e-commerce platforms, both export and import businesses have shown strong growth momentum.
In Shenzhen, one significant factor behind the rapid development of cross-border e-commerce is its geographical advantage. As a key international trade port city, Shenzhen boasts well-developed infrastructure, high logistics efficiency, abundant talent resources, and an innovative environment—all of which provide favorable conditions for establishing a robust cross-border e-commerce ecosystem.
Current State of the Air Cargo Market
As cross-border e-commerce expands, logistics solutions tailored to these businesses must evolve accordingly. Among various logistics methods, air cargo has become the preferred choice due to its rapid delivery speed. Since March 2024, air cargo rates have remained high, particularly on Europe and North America routes, where average rates reached 40 yuan per kilogram, with certain intercontinental routes approaching 50 yuan per kilogram. Despite these elevated rates, market demand remains robust.
Unlike previous years, the air cargo market did not experience a typical post-holiday slowdown after the Lunar New Year. Instead, it continued to handle strong export orders. Cross-border e-commerce orders, particularly those using direct shipping models, performed exceptionally well, showcasing the market's vitality. This sustained activity has kept the air cargo market exceptionally busy, with a surge in parcel volumes from major e-commerce platforms further driving up freight demand.
Analysis of the Full-Turnkey Export Model
Currently, the cross-border e-commerce industry widely adopts a full-turnkey export model, primarily relying on traffic and logistics subsidies provided by e-commerce platforms. Initially, this model demonstrated significant cost benefits, allowing many consumers to enjoy affordable imported goods. Platforms competing for market share have attracted a large customer base through subsidies and low-price strategies, creating a positive market cycle.
However, the sustainability of this subsidy-dependent business model remains uncertain. Any changes to subsidy policies could profoundly impact buyer behavior, seller operations, and overall platform dynamics. It is foreseeable that tighter subsidy policies would directly lead to higher product prices, affecting consumer purchasing decisions and potentially dampening overall market demand.
Chartered Flights and Local Subsidy Policies
With the surge in cross-border e-commerce parcels, many logistics companies and e-commerce platforms have turned to chartered flights to meet growing logistics needs. However, the economic viability of this approach is influenced by multiple factors.
Subsidy policies for chartered flights vary significantly across regions. Some local governments provide substantial financial support for air cargo subsidies, particularly when flights originate from mainland Chinese airports. These subsidies can significantly reduce operational costs, influencing operators' decisions when selecting routes and transportation solutions.
Nevertheless, as local fiscal pressures increase, subsidy policies may tighten, leading to higher chartered flight costs. If this occurs, it would directly impact the overall air freight rate structure, particularly on Europe and North America routes, where shipping costs could rise substantially—ultimately passing these costs on to consumers.
Challenges and Strategic Responses
Entering 2024, the primary challenge for cross-border e-commerce is no longer insufficient demand but increasingly severe capacity constraints. With limited supply, the industry will inevitably shift toward a survival-of-the-fittest competitive model, intensifying competition in the air cargo market. Low-value goods may face market elimination—a trend becoming increasingly apparent among e-commerce platforms and logistics providers.
Despite high air freight rates and capacity constraints, this does not necessarily threaten the business model. A dynamic equilibrium exists between market supply and demand. E-commerce platforms, sellers, and logistics companies must remain attuned to market trends and adjust their strategies accordingly.
Recommended Operational Adjustments
- Optimize Operations: Cross-border e-commerce companies should focus on improving process efficiency, particularly in inventory management and order fulfillment, leveraging digital tools to reduce costs.
- Diversify Logistics Solutions: Given high air cargo rates, businesses should explore alternative logistics methods, such as sea freight, to lower overall shipping expenses and ease price pressures on consumers.
- Adapt to Policy Changes: Companies must remain vigilant about subsidy policy shifts and adjust pricing strategies accordingly to prevent customer attrition.
- Explore Emerging Markets: Beyond traditional markets like the U.S. and EU, businesses should tap into developing regions to diversify risks and uncover new opportunities.
- Strengthen Branding: As competition intensifies, brand influence becomes crucial. Companies should invest in brand building to enhance customer loyalty and repeat purchases.
Future Outlook and Conclusion
Looking ahead, the cross-border logistics industry will face both opportunities and challenges. Despite the complex and evolving market environment, both the full-turnkey model and air cargo supply are expected to grow, presenting new prospects for stakeholders. Success will hinge on accurately assessing market conditions and adapting promptly.
Relying solely on subsidies and low-price strategies is unsustainable. Cross-border e-commerce businesses must transition toward long-term profitability and competitive strength. By understanding market dynamics, optimizing operations, and enhancing supply chain efficiency, companies can secure their position in an increasingly competitive landscape.
As technology advances and markets mature, the cross-border e-commerce and logistics sectors will encounter more innovation opportunities. To overcome upcoming challenges, businesses must continuously adapt, guided by precise strategies, to establish and maintain their market presence. In summary, 2024 will be a pivotal year for cross-border e-commerce and logistics, requiring collective effort from industry participants to seize emerging opportunities.
