Chinese logistics specialists are expanding in the US, developing sprawling end-to-end distribution networks that help merchants in their home market cut costs and minimize tariff exposure, according to industry experts.

More of the products Americans buy from Chinese bargain e-commerce platforms like Temu are now shipped by Chinese freight companies, warehoused in US facilities owned or leased by Chinese entities, and delivered by Chinese-backed “last mile” carriers.

“Chinese companies are moving downstream in the e-commerce process,” Yao Jin, an associate professor of supply chain management at Miami University in Oxford, Ohio, told Nikkei Asia. “They look at the net outcome and distribute profit, cost and risk across all members of the supply chain.”

The growth of the Chinese distribution networks accelerated last year, after US President Donald Trump ended the so-called de minimis exemption, which allowed international shipments worth up to USD 800 to enter the country duty-free.

E-commerce platforms like Temu and Shein were forced to adapt. Temu responded by stepping up bulk shipments of its best-selling products to US warehouses and fulfilling more orders from those facilities, rather than shipping individual parcels from China as it had when the “de minimis” exemption remained in force.

At the same time, Temu reduced its role in handling logistics for Chinese merchants, pushing sellers to secure their own customs clearance services to reduce its own costs and operational risks, said Ed Sander, author of the China Digital Retail Report, a newsletter.

Sander said merchants managing their own shipments account for 75% of merchandise sold in the US via Temu, while the rest is handled by Temu.

PDD Holdings, Temu’s parent company, does not break down the platform’s regional business. But according to Sander, the US accounted for a third of the online marketplace’s merchandise volume last year. He expects revenue from US sales to grow but its share to shrink as the e-commerce industry begins to mature and adapts to the new tariff environment.

Lizhi Liu, an expert on Chinese e-commerce, said Chinese platforms and merchants have become more “agile in adapting their supply chains, logistics strategies, and organizational structures” to cope with geopolitical risks. This, in turn, has contributed to the growth of the Chinese logistics sector on both sides of the Pacific.

Jason Price, head of logistics and industrial research for the Americas at Cushman & Wakefield, said 20% of warehouse leasing activity last year was by Asian companies, of which more than two-thirds were Chinese. Asian companies leased just under 1.95 million square meters of space in 2025, after securing a record 2.04 million square meters the previous year.

In early June, Chinese state-owned COSCO Shipping and Western Post jointly set up a 32,602-sq.-meter warehouse in Savannah, Georgia, that can process up to 10,000 orders daily.

Critics say Chinese companies are creating a fulfillment network that makes it difficult for US services to compete, even on their own turf. One Chinese warehouse was offering a maximum rate of 60 cents per e-commerce package to be fulfilled, according to a March price list seen by Nikkei Asia.

“No other US [third-party logistics company] can offer that,” said one executive at an American warehouse and fulfillment company. US players’ rates are “usually in the USD 2 range, and sometimes higher.”

Chinese-backed last-mile delivery companies such as UniUni, GoFo, and SwiftX are also grabbing US market share, thanks to their low costs and close ties with China’s e-commerce platforms, according to ShipMatrix, a shipping consultancy and analytics provider. Alibaba’s Cainiao recently expanded its carrier services in the US to serve AliExpress customers, the company told Nikkei Asia, declining to share details of its coverage area.

One manager at another Chinese-backed carrier said almost all of its package volume comes from Temu, Shein, and TikTok Shop.

Although these carriers still handle only a small percentage of US parcel deliveries, their share of the market by volume grew 13% last year, putting the likes of UPS, FedEx, and the US Postal Service on notice. Satish Jindel, president of ShipMatrix, expects the upstarts’ market share will grow 20% to 40% over the next year as they extend their delivery networks.

One way they minimize overhead is by relying on independent drivers to carry parcels to their destinations. “The big boys are not embracing in a fully open manner the gig model,” Jindel said, referring to the long-established Western leaders. The cost of using American last-mile operators is also higher due to expensive unionized labor.

Another reason for the growth of Chinese-run logistics services is that operators offer familiar procedures and Chinese-language support to e-tailers that may not be proficient in English. This is something Western competitors, such as the USPS, cannot easily match.

Keeping the entire process in Chinese hands can create opportunities to curb tariff exposure as well, some industry experts say. Although Trump’s “reciprocal” tariffs were struck down by the Supreme Court earlier this year, many levies remain in place and the administration recently proposed new duties of up to 12.5% on China and other trading partners over alleged failures to combat forced labor.

Efforts to minimize the levies start in China, where goods of different kinds destined for the US are increasingly packaged and labeled before being combined with thousands of other parcels into a larger shipment, according to two Chinese logistics executives and other industry insiders.

“The shipment is then categorized under a broader, more general product customs code,” one logistics executive told Nikkei Asia, speaking on condition of anonymity due to the illicit nature of the practice. “This is a very common method now [by Chinese e-commerce companies] and still gets [products] to the customer quickly.”

While the end of the de minimis exemption contributed to a 30% decline in the number of packages shipped in 2025, to 942.5 million, industry insiders say volume has simply shifted into larger bulk flows.

Trade lawyers distinguish illegal practices, such as intentionally misclassifying goods or understating their value, from another common method of minimizing duties, known as “first sale value.”

For some wholesale freight, companies will declare the value of the products when they enter the US based on what they cost to manufacture—the “first sale”—rather than the higher retail value. Using the first sale value is a legal method of reducing duties. It was mostly employed by apparel and footwear importers before Trump’s second presidency, according to William Marshall, head of global trade at Alvarez & Marsal.

When tariffs were lower, companies saw little benefit in insisting on the first sale price, as extensive documentation is required. But the higher tariffs provide an incentive to take this extra step. As a result, there has been an “explosion” of importers using this approach across all industries, Marshall said.

“The end of de minimis has made a lot of global e-commerce retailers reexamine their business models in order to be as cost efficient for their customers as possible,” Marshall said. “And so the first sale is one of those legally appropriate methods to do that.”

Underreporting of the value of Chinese imports to minimize duties is one reason why official trade data from the two countries show large discrepancies. The official value of China’s exports to the US last year exceeded the import value recorded by the US, to the tune of USD 112 billion, and the gap persists.

Xuepeng Liu, a professor who researches tariff evasion at Kennesaw State University, said misreporting, currency exchange rates, differences in valuations and outright tariff avoidance are all factors. “No matter if the misreporting happens at the Chinese border or the US border, collaboration or collusion is often needed for a successful evasion because much of the information is often provided by trading partners,” he said.

To avoid responsibility if they are caught crossing legal lines, freight forwarders often use shell companies as importers of record. But this practice has caught Washington’s attention.

Trump signed an executive order on June 3 to strengthen enforcement, directing Customs and Border Protection (CBP) to tighten eligibility criteria for new importers of record. Such entities will be required to provide more detailed information about their ownership, business operations and supply chains. Foreign importers could face additional restrictions barring them from importing goods valued under USD 2,500, creating roadblocks for Chinese freight forwarders.

But once shipments clear customs, they are increasingly routed through Chinese-backed warehouses and eventually handed off to the carriers for delivery.

Jianlong Hu, CEO of Brands Factory, a Chinese cross-border e-commerce consultancy, said intense competition has driven Chinese involvement across the e-commerce chain.

“As fulfillment speed and efficiency become decisive factors, Chinese sellers are increasingly stocking inventory locally in the US to better serve American consumers, which in turn creates demand for Chinese-operated warehousing and last-mile capabilities that understand their workflow and cost structure,” he said.

The Chinese services offer such good deals that even some US players are turning to them. One US third-party logistics operator said that while the company will continue to use traditional carriers, he recently signed a contract with UniUni and is in negotiations with another Chinese-backed company.

“They can do it at rates that are so low that it’s hard for other carriers to deal with,” the logistics executive said. “Quite frankly, it is one of the only ways I can remain competitive.”

This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.