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Corporate Giants Add Wings to Air Cargo Market
China's air cargo market is embracing greater opportunities and challenges and higher demands in the global logistics system from all sectors
  ·  2020-01-13  ·   Source: NO.3 JANUARY 16, 2020

China's air cargo market is seeing a new round of industrial layout competition by giant companies from home and abroad, who have taken intensive steps to strengthen their positions. They are injecting capital and confidence into the arena with larger fleets, more complete route networks and stronger infrastructure and service support.

On December 24, 2019, China Southern Air Holding (CSAH) launched an air cargo company to further tap the market. With a registered capital of 1 billion yuan ($143.87 million), the new company is registered in Guangzhou in Guangdong Province, south China. CSAH is the parent company of China Southern Airlines, the country's largest air carrier with a fleet of more than 860 aircraft. The move is aimed at consolidating its position in the air cargo market with services throughout the industrial chain.

On December 31, 2019, SF Airlines announced its all-cargo freighter fleet had reached 58 on its 10th anniversary. The Shenzhen-based airline is a subsidiary of the SF Express Group and is the first airline founded by a private courier company in China. It has become the country's largest air cargo carrier and created a global air cargo service network with 65 destinations. In 2020, its all-cargo freighter fleet is expected to exceed 60 with over 70 global destinations.

"Chinese enterprises are optimizing their global industrial distribution and strengthening their global performance while Chinese customers have shown their great cross-border consumption capacity," SF Airlines President Liddel Li said. "All these factors foster our sustainable growth and confidence in the Chinese air cargo market."

SF Airlines has evolved into a medium-sized cargo airline over the past 10 years, a golden decade of China's booming express delivery and civil aviation industries.

China has become the world's fastest growing and most dynamic emerging post and delivery market. The volume of its express packages has exceeded the sum of those of the U.S., Japan and Europe combined.

The civil aviation industry is also a highly sensitive barometer of the economy. The Chinese market has generally maintained its growth momentum, and the air cargo sector is particularly impressive.

Thanks to sustainable economic growth and persistent support, China's civil airport sector has gained high-speed and high-quality development in the past decade, according to Zhang Rui, Deputy Director of the Airport Department of the Civil Aviation Administration of China (CAAC).

Over the 2009 to 2019 period, the number of certified civil airports went from 158 to 238 in China. Eight airports advanced into the world's top 50. In the same period, the cargo throughput of civil airports across the country expanded from 8.83 million tons to 16.74 million tons. "The enhanced air cargo capacity is a highlight in the new round of airport renovation and construction," Zhu Qianhong, General Manager of Guangdong Airport Authority, said.

In the airport construction plans newly approved by CAAC, the designed annual cargo capacity of Kunming, Chongqing and Xiamen airports will all exceed 1 million tons. The Beijing Daxing International Airport, which opened in September 2019, is expected to handle more than 2 million tons of air cargo in 2025. Major air hubs in Shanghai and Guangzhou will also gain enhanced air cargo throughput capacity.

SF Express has also invested heavily in constructing an international logistics hub in Ezhou in Hubei Province, central China. With a cargo-focused airport in the hub, the company will strengthen its worldwide air express delivery system.

"The intensive moves of the corporate giants in the Chinese air cargo sector are driven by market potential. China's huge consumption market and unleashed spending power will drive the industry into a new round of development," Zhu said.

In October 2019, Guangzhou Aircraft Maintenance Engineering Co. (GAMECO) and Boeing announced a plan to launch a 737-800 Boeing Converted Freighter production line at GAMECO's Guangzhou Baiyun International Airport hangar.

China's rapidly growing e-commerce and express delivery market will make air cargo a key growth driver. Over the next 20 years, demand is expected for 230 new freighters and 500 converted freighters, Boeing's latest market forecast said.

"Air France KLM Cargo greatly values the potential of China's air cargo market. There is no better place in the world than China where digital content and usage are embraced and welcomed," said Rahul Pathak, head of Air France KLM Cargo China.

The airline has recently introduced a data platform designed for small and medium-sized enterprises, enabling them to stay responsive to market changes.

"China's air cargo market is embracing greater opportunities and challenges alongside the advance of the Belt and Road Initiative and higher demands in the global logistics system from all sectors," Li said. "It is a major opportunity for domestic enterprises and also new business opportunities for global peers."

This is an edited version of the article published by Xinhua News Agency

Copyedited by Sudeshna Sarkar

Comments to linan@bjreview.com

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