Sen. Cotton urges DOJ investigation of China-backed parcel carriers

May 22, 2026

Republican Sen. Tom Cotton has asked the Department of Justice to investigate whether Chinese controlled parcel delivery companies pose a national security and supply chain risk, claiming they leverage unfair foreign subsidies, vast amounts of granular data and shady import practices to take business from American companies.

Logistics analysts acknowledge that Chinese-backed last-mile delivery carriers with an ultra-low cost business model and lower compliance standards are rapidly gaining market share, putting pressure on FedEx, UPS and regional carriers like Veho and OnTrac.

Some say that characterizing Chinese-influenced couriers as a security threat overstates the problem and is a way to appeal to the America-first tendencies of the Trump administration for action. But others contend these alternative carriers are taking away American jobs by offering below-cost pricing, made possible by deep-pocketed Chinese investors and low labor rates.

In a May 19 letter to Acting Attorney General Todd Blanche, Cotton complained that U.S.-incorporated companies like Gofo, funded by the Zongteng Group, and SpeedX, founded by a veteran of the Chinese freight industry, had “infiltrated” the United States to provide cross-border logistics services for e–commerce platforms like Shein, Temu and TikTok Shop. Other carriers of concern to the Arkansas senator include Canada-based UniUni, Indonesia’s J&T Express, which counts Chinese multinational technology conglomerate Tencent as an investor, and Zongteng subsidiaries YunExpress and Cirro Logistics.

The carriers typically use independent master contractors, also known as delivery service providers, or app-based gig drivers to make front-door deliveries, as do many independent U.S.-owned delivery companies.

“These companies move through American neighborhoods, commercial districts, and roads near critical infrastructure. They collect detailed data on routes, businesses and homes while undercutting American competitors on price. This is a familiar playbook: Chinese firms enter the United States at subsidized prices, capture market share, and embed themselves into daily American commerce,” Cotton wrote.

Startup parcel carriers began proliferating five years ago on the back of the pandemic-fueled e-commerce boom as Chinese marketplaces took advantage of a previoussly overlooked import loophole to rapidly ramp up B2C sales in the United States.

U.S. policymakers in recent years have similarly investigated China’s near monopoly on ship-to-shore cranes at ports and their potential to be used as spy platforms for the Chinese government and the Trump administration last year pressured a Hong Kong-based company to divest from two port facilities in the Panama Canal over concerns China could control trade flows in the event of a broader conflict.

A coalition of five regional U.S. parcel carriers, including Hovership, has been working behind the scenes on Capitol Hill to bring attention to the Chinese couriers. Hovership shared a copy of the letter with FreightWaves.

Data privacy and competiton questions

Large-scale delivery operations inherently generate high-resolution, street-level data with images of homes, access points, delivery patterns and consumer behavior. When aggregated at scale, that data becomes infrastructure intelligence — raising questions about where it is stored, how it is used, and who ultimately has access, Hovership founder and CEO John Zendejas said in an interview. He likened the problem to TikTok and why the U.S. government in January forced Byte Dance to sell its U.S. assets to a majority American-owned joint venture. And since virtually all Chinese companies receive financial backing from the government to improve their global competitiveness, those carriers could be forced to share their data with authorities because there are no private sector firewalls there, he added.

“I think that with package delivery, you could infer consumer buying habits in the same way [as TikTok] because the name of the shipper is on the outside of the box. The delivery companies know who the shippers are. They know what people are buying, as well,” Zendejas said. U.S. delivery companies and their customers sign rigorous data protection agreements, but the Hovership CEO suggested that Chinese counterparts might sell that data to a customer’s competitors or the Chinese government.

And American firms can’t compete with Chinese firms whose primary interest isn’t about making money and who are leading a race to the bottom on pricing in a sector with razor-thin margins, he argued.

“Everybody wants to know what they could do with data that’s being sent abroad where we’ve got less legal control,” he told FreightWaves. “But the main issue, for me, is really the takeover of the supply chain itself and the leverage that could be had if you’re a foreign government owning big chunks of the U.S. supply chain.”

Analysts say none of the China-connected startups are making any money yet and will need to raise more funds from investors to continue building out their delivery networks, including parcel distribution centers. Trying to understand who is behind these companies is very difficult because they often don’t disclose their investors, many of whom are often interconnected.

One consultant active in express parcel logistics, who asked not to be named in order to speak freely, dismissed the notion that China-backed parcel carriers have special data-collection techniques that can be used for nefarious purposes.

“Anyone that has Google Maps and Google Street View can see the same thing. You don’t need to have thousands of drivers delivering packages to understand where people live. People’s addresses, home values, etc., it’s all public record in America, and anyone from the Chinese government can have that,” he said.

A more legitimate line of inquiry would look at the labor practices of startup couriers and how their low driver and warehouse compensation gives them an advantage over more mature carriers, the industry professional added. And any examination of these carriers gets tricky when CEOs of Chinese descent, who were born in America as U.S. citizens, secure venture capital from overseas in the same way U.S.-based companies are legally allowed to act.

Gofo, for example, was founded in 2023 by Chuan Zheng, a U.S. citizen of Chinese heritage with extensive experience in logistics and cross-border e-commerce. A significant share of historical volume has come from e-commerce merchants linked to China, but the U.S. business is rapidly expanding its presence among North American retailers and smaller online sellers.

UniUni, based in Vancouver, Canada, was co-founded by Peter Lu, who went to university and started his career in Shanghai. In March, the company received a $30 million equity investment raised by Rockets Capital, a China-based private equity firm that opened in 2022. The company’s lead Canadian investor is Celtic House Venture Partners. The carrier recently announced it plans to go public in partnership with a special purpose acquisition company in a deal that values the company at $1 billion.

Mark Waverek, a veteran parcel industry operator and managing partner at PlaidMark Management Consulting, said Cotton raised valid concerns.

“Should legislators wait until it’s too late or do they try to circumvent that now and say, ‘Hey, we’re not going to allow foreign governments to come in here and take away market share that could impact jobs,” told FreightWaves. “The bottom line of the whole inquiry is, if this costs American jobs, how is this good for America?”

The huge Chinese marketplaces that rely on the startup parcel carriers get rates below the actual cost of delivery, Waverek alleged. It might be possible to make money on some routes if there is enough volume density, but in most cases they lose money and can only survive with subsidies. The fact that most low-cost delivery companies don’t charge fuel surcharges at a time when diesel fuel prices are skyrocketing proves the point that their goal is to drive competitors out of the market, he said.

And what China-connected parcel carriers do with their data is a big question mark, Waverek added.

“When you train delivery robots [as some companies are experimenting with] they capture geo-location data. So it tells you where people live, what they receive. You can build an algorithm on everything that someone does. I don’t think Google Maps tells what you receive at your house every day,” he said.

The last-mile delivery space has become so commodified in recent years that FedEx and UPS are shifting their attention to higher margin B2B logistics services and cross-border, or long-distance domestic e-commerce shipping, which are more complex to execute and command higher rates.

Meanwhile, Chinese marketplaces like Shein, Temu, Alibaba, TikTok Shop and JD.com are actively leasing large warehouses, stocking them with China-made goods shipped by ocean and fulfilling orders from U.S. soil. The trend accelerated last year when the U.S. government closed the de minimis privilege that provided duty-free, informal entry with limited paperwork for low-dollar imports, significantly reducing the advantage of direct-to-consumer fulfillment from China, with individual shipments moving by aircraft directly to partner parcel carriers for home delivery.

“I think it’s really more theatrics than it is national security. There’s probably something to be said about these companies undercutting others with their pricing, but it’s not a national security play. It’s a typical competitive play. The Chinese model has been going on for a long time with tariffs and with some of their import practices,” the consultant added.

Cotton urged the Justice Department to examine the ownership and control of Chinese-linked last-mile delivery companies, the data they collect and the Chinese government’s access to it, whether their subsidized, “predatory” pricing violates federal antitrust laws and whether the firms or their parent companies facilitate tariff evasion and customs fraud.

“Chinese-owned third-party logistics companies make a business out of helping their clients evade [tariffs] through transshipment, undervaluation, and ghost importers of record, then undercut domestic firms with the savings. That’s not competition. It’s industrial displacement,” the senator said.

While many Chinese companies have been officially accused over the years of various types of duty evasion, the illegal activity is not limited to Chinese exporters and their freight agents.

“We should make sure that these parcel carriers are on an equal playing field before they have an adverse effect on U.S. companies,” but using the specter of a Chinese communist threat to national security is political “threatrics,” the parcel expert said.

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Write to Eric Kulisch at ekulisch@freightwaves.com.