Freight forwarders fear global big boys

PUBLISHED : Wednesday, 09 March, 2011, 12:00am
UPDATED : Wednesday, 09 March, 2011, 12:00am

The central government's plan to boost the number of airports by 45 in the next five years may be good news for the air cargo industry but rising costs, stiff competition and differences in customs policies among provinces mean many small freight-forwarding companies could be put out of business.

Liu Shaocheng, director of policy research at the Civil Aviation Administration of China, said the new airports will be located in more remote and underdeveloped areas.

'They may be [unprofitable] but they can boost the area's economy. Yunnan, for example, used to be a remote area but after the construction of an airport there, both tourism and the general economy picked up,' Liu told the biennial Air Freight Asia 2011 Conference that opened yesterday.

'Eventually the airports will also draw cargo and logistics businesses. We hope individual provincial governments will help raise capital and introduce incentives to attract foreign capital,' he said.

Under the 12th five-year plan announced last week, the central government will inject more than 1.5 trillion yuan (HK$1.78 trillion) in developing the aviation business, including raising the number of airports from 175 to 220 and nearly doubling the aircraft fleet from 2,600 to more than 4,500.

But while airline representatives said different customs rules in different provinces hindered the development of e-freight - an initiative to replace supply chain paperwork with electronic messaging - a big mainland logistics firm said the government should stop multinationals from dominating China's air cargo business as that would stifle development of local freight forwarders.

'Multinational firms take up 80 per cent of the air cargo market. Although the pie is getting bigger, competition is also becoming more intense,' said Solomon Cai Shenyu, chief executive of Globelink China Logistics.

'Many of the 30,000 small couriers will have to merge to stand up to the conglomerates or go out of business,' he said.

Yvonne Ho, country manager of the International Air Transport Association, said the organisation hopes to promote e-freight in new and small airports but differences in customs policies at different provinces presented an obstacle.

Take-off point

Planners say airports can spur development in regional areas

In the 12th five-year plan Beijing has set aside, in yuan, this much for developing the aviation sector: 1.5tr yuan




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