China key to revival in air-cargo growth

PUBLISHED : Thursday, 04 September, 2014, 6:21pm
UPDATED : Thursday, 04 September, 2014, 6:21pm

Asia, in particular China, is key to rejuvenating growth in air cargo, a US$6 trillion industry that has suffered from sustained stagnation since the 2008 financial crisis, and e-commerce is expected to spearhead that revival, global aviation and air-cargo leaders meeting in Zhengzhou, China, for the first Air Cargo Development Forum said yesterday.

Air cargo, which transports 35 per cent of global trade by value, has yet to return to pre-recession levels by volume, but fresh data showed acceleration in traffic growth.

During the first half of 2014, world freight traffic grew 3.7 per cent, almost one point higher over the 12-month rolling period, according to Airport Council International.

Asia, by far the world’s largest cargo market and responsible for 39 per cent of the total volume, recorded growth above the worldwide average in 2013, with eastern Asia growing at 4.5 per cent.

“China is a very important market and that is why we are here,” said Arun Mishra, regional director of the International Civil Aviation Organisation, the organiser of the first forum of its kind.

China represents 45 per cent of the region’s air-cargo market while Chek Lap Kok in Hong Kong is the world’s largest cargo airport, according to the council’s director general Angela Gittens.

Cargo throughput at Hong Kong International Airport recorded a 5 per cent increase in 2013 to 4.2 million tonnes, above the regional average of 2.1 per cent.

Xia Xinghua, director general of the China Civil Airports Association, said: “One-third of Chinese rely on e-commerce. The rise of e-commerce in China is so fast that it forces freight handlers and airlines to find ways to work together with that. I think that is a very good trend.”

Wang Zhiqing, deputy administrator of the Civil Aviation Adminitration of China, said air cargo in the country experienced rapid growth between 2002 and 2010, with per-annum growth close to 10 per cent, followed by a decline in 2011 to 2013.

“We have finally come out of that in the first half of this year as domestic freight increased 5.7 per cent and international 6.6. per cent,” Wang said.

“The industry must adapt itself to meet changing demands with the rise of the express market and become integrated logistics operators.”

China’s express market has grown 43.5 per cent per annum since 2008 to become the world’s second-largest after the United States, underpinned by the rise of e-commerce.

“The aviation industry has not fully capitalised on the development of the express market,” said Li Sheng, vice-president of SF Express, China’s largest express delivery company with a fleet of 34 freighters.

The industry must adapt itself to meet changing demands with the rise of the express market
Wang Zhiqing, Civil Aviation Adminitration of China deputy administrator

“The express industry’s tonnage turnover is expected to hit almost 10 million tonnes by 2018 and demand for freighters is seen reaching 150 to 200.”

China currently has 101 freighters, 80 per cent of which are used for express.

Citing an estimate by the European E-Commerce Association, Zhu Gaozhang, director of compliance and facilitation at the World Customs Organisation in Brussels, said: “By 2016, the value of e-commerce in China in one day will reach US$36 billion.”

Apart from the development of e-commerce, rising demand from Asia-Pacific for imported goods is expected to reshape the direction of global air-cargo flow.

Andrew Herdman, director general of the Association of Asia Pacific Airlines, said a directional imbalance had been a general pattern for air cargo in Asia with outbound tonnage outweighing inbound, which affected rates.

“China has really opened up as an import market in the past few years,” said Enno Osinga, vice-chairman of the International Air Cargo Association. “So in the past, China was just an export market, but now the industry is developing in China … so that will also have a major impact on air cargo.”