Temu and Shein Hit as Iran War Pushes Up Logistics Costs and Weakens Demand

China’s rapid global expansion in low-cost e-commerce is losing momentum as the ongoing conflict in Iran pushes up logistics costs and weakens consumer demand in key Western markets, according to industry data and trade analysis.

The business model powering platforms such as Temu, Shein, and AliExpress; built on shipping inexpensive goods directly from Chinese factories to global consumers, has come under increasing strain as air freight and fuel prices surge due to disruptions linked to the war in Iran.

Analysts say rising jet fuel costs and higher insurance premiums for long-haul shipping routes are forcing companies to increase prices, eroding the ultra-low-cost appeal that drove the sector’s rapid growth over the past decade.

The slowdown is also being driven by softer demand from price-sensitive consumers in Europe and the United States, where inflation and higher household expenses are reducing spending on discretionary imports.

Recent trade data shows Chinese low-cost e-commerce exports have fallen for five consecutive months, underscoring a broader cooling in the sector’s expansion.

Industry players are now increasingly shifting toward bulk shipping and regional warehousing models in an attempt to reduce reliance on expensive air freight, but analysts warn that such adjustments may not fully offset rising global transport costs.

The Iran conflict has also disrupted shipping lanes and increased global freight volatility, with carriers introducing fuel surcharges and adjusting routes to manage risk exposure, further adding pressure on exporters.

Experts say the combined impact of weaker demand, higher logistics costs, and a maturing global e-commerce market could mark a turning point for China’s fast-growing cross-border retail sector.