(In Feb. 21 story, corrects paragraph 7 to show that China's

cross-border e-commerce shipments, not fast-fashion, take up

about one-third of global long-distance cargo aircraft

capacity.)

By Arriana McLymore, Casey Hall and Lisa Barrington

NEW YORK/SHANGHAI, Feb 21 (Reuters) - The rapid rise of

fast-fashion e-commerce retailers such as Shein and Temu is

upending the global air cargo industry, as they increasingly vie

for limited air-cargo space to woo consumers with rapid transit

times, more than ten industry sources said.

Shein, PDD Group's Temu and ByteDance's TikTok Shop,

which recently began online shopping in the U.S., ship the

majority of their products directly from factories in China to

shoppers by air in individually addressed packages.

And their growing popularity - Shein and Temu together send

almost 600,000 packages to the United States every day,

according to a June 2023 report by the U.S. Congress - is

boosting air-freight costs from Asian hubs like Guangzhou and

Hong Kong, making off-peak seasons almost disappear and causing

capacity shortages, the sources said.

"The biggest trend impacting air freight right now is not

the Red Sea, it's Chinese e-commerce companies like Shein or

Temu," said Basile Ricard, director of Greater China operations

at freight forwarder Bollore Logistics.

According to data aggregated by Cargo Facts Consulting, Temu

ships around 4,000 tonnes a day, Shein 5,000 tonnes, Alibaba.com

1,000 tonnes and TikTok 800 tonnes. That equates to

around 108 Boeing 777 freighters a day, the consultancy said.

Driven by robust demand for their low-priced apparel like

$10 tops and $5 biker shorts, Shein alone accounts for one-fifth

of the global fast-fashion market, measured by sales, and has

fueled growth of China's e-commerce industry, according to

Coresight Research.

Fast fashion now accounts for half of China's total

cross-border e-commerce shipments, which take up about one-third

of global long-distance cargo aircraft capacity, according to

cross-border transportation media firm Baixiao.com.

Shein and Temu's growth is squeezing out space for other

industries on air freighters, just as global firms are

scrambling to find alternative logistics options due to the Red

Sea disruptions.

"When the Suez Canal (crisis) hit, there was no capacity to

be bought, because e-commerce has bought it all," said an

executive at an air cargo carrier, who requested anonymity due

to industry sensitivities.

Pronounced demand for air freight from fast fashion started

increasing dramatically in the second half of last year, several

sources said.

A German logistics source said even large tech firms like

Apple ( AAPL ) transport only 1,000 tons maximum a day and the

growing cargo demand from fast fashion could push out

traditional long-term customers, as they vie for limited air

capacity.

Some air-freight carriers have responded to the increased

e-commerce demand by providing additional charter capacity,

"which is already heavily booked for the long term," said a

spokesperson for German logistics firm Schenker.

Apple ( AAPL ) declined to comment. TikTok Shop did not return

messages seeking comment.

"Shein is continually optimizing its efforts to ensure the

best customer experience and fulfillment efficiency," a Shein

spokesperson said, declining to elaborate.

THE HUNT FOR CAPACITY

The sudden spike in demand from fast fashion that began last

year has lifted air-cargo rates from China and is raising

concerns about longer-term capacity shortage.

"Based on what we have seen, this model of (airborne)

e-commerce is not sustainable, neither from a profit or

environmental standpoint," said Guillermo Ochovo, director at

Cargo Facts Consulting.

He said both Shein and Temu are now looking more at sea

freight due to the high cost of air freight and considering

opening warehouses outside of China to shorten transport times

to other regions.

Shein has started sending goods to U.S. warehouses to speed

up shipping times.

According to Baixiao founder Wang Yongqiang, in a

presentation to a Boeing ( BA ) air cargo forum in China in

December, supply growth of long-distance freighters cannot keep

up with the growth of cross-border e-commerce.

In its 2023 commercial market outlook, Boeing ( BA ) estimated

China's air cargo fleet would more than triple to 750 aircraft

between 2022 and 2042. Boeing ( BA ) declined to comment.

E-commerce firms are trying airlines directly to secure more

capacity, according to the executive at a major air cargo

carrier and Unique Logistics ( UNQL ).

"Temu, we understand, is looking to lease 12 wide-body

freighters. They are scouring the market for any aircraft they

can find. We even received a request to our website," Marc

Schlossberg, executive vice president of Air Freight at Unique,

told Reuters.

Temu told Reuters in a statement that it is looking for

sellers based in the U.S. and Europe "to reduce shipping

distances and delivery times" to shoppers.

Airlines and freight forwarders are also contemplating how

much capacity to set aside for Temu and Shein's business as

shipments and prices fluctuate.

Niall van de Wouw, chief air freight officer for air and

ocean freight rate benchmarking platform Xeneta, said fast-

fashion brands are causing a "trade imbalance" with large

amounts of cargo leaving Hong Kong but merchandise volumes being

"much lower on the journey back across the Pacific."

The impact of China's new e-commerce giants is

"game-changing," said Schlossberg. "They ... are emerging as the

most important drivers in the industry."