Prospects for the Airfreight Industry in China
China is a major manufacturing centre in the world and has a strong export capability for a variety of products, including smartphones, computers, integrated circuits, high-end fashion products and fast fashion products. At the same time, China's imports of electrical machinery and equipment, optical equipment, technical equipment and medical equipment accounted for 24% and 4.8% of the import volume respectively. From 2015 to 2019, the market size (total revenue) of China's comprehensive air freight agency industry increased from about 46.8 billion yuan to 73.9 billion yuan. With the growth of China's manufacturing industry and the development of cross-border e-commerce, the export volume has increased; and the competitiveness of China's air transportation industry has improved. According to the statistics, the market size of China's comprehensive air freight agency industry is expected to be nearly 80 billion yuan in 2020.
The growth of international trade in air transportation has driven the growth of the air freight agency industry: This is highly dependent on the volume of goods transported. China's increasing disposable income, demand for the timeliness, and emerging airports have contributed to the increase in air cargo traffic. As the volume of air freight is expected to continue to increase, the demand for air freight forwarding solutions will increase accordingly.
The improvement of airport infrastructure is expected to continue to stimulate the demand for the integrated air freight agency industry. The number of Chinese civil aviation airports increased from 202 in 2014 to 235 in 2018, with a compound annual growth rate of approximately 3.9%. In terms of air cargo throughput, in 2018, Shanghai, Beijing, Guangzhou, Shenzhen and Chengdu (regarded as China's major air freight hubs) ranked in the top five. Looking ahead, the respective expansion plans and new airport construction of these cities have been carried out as planned. It is expected that within the next ten years, the current airstrip system will be renovated, new terminals and airports will be built to expand the capacity of the airport to meet the growing freight volume and improve the efficiency of air transport, which is expected to promote the development of the air transport agency industry.
In response to the industry crisis brought about by the epidemic, airlines in various regions of China, under the encouragement of government policies, have begun to adopt a series of response measures, including the conversion of passenger aircraft into cargo aircraft. Among them, Shandong Airlines modified an all-cargo aircraft for international and domestic cargo at Shandong TAECO Company on April 16 and helped to resume production and return to the market. 20 tons of cargo were pulled, which was more than three times higher than before the conversion. Shandong Airlines introduced that during the period of epidemic prevention and control, many passenger flights were suspended, and the demand for freight was increasing. Shandong Airlines has decided to transform three 737-800 all-cargo aircraft. Two were modified in Qingdao and one in Jinan.
Besides, more recently modified Boeing 757 aircraft were sent to the Chinese express delivery company. SF Airlines currently operates 27 Boeing 757 modified freighters and China Post Airlines operates 6 aircraft. SF Airlines and other Chinese parcel carriers are continuing to expand the size of aircraft formations. According to ICF estimates, by 2025, the demand for additional Boeing 757 modified aircraft will exceed 100, which means that nearly half of the entire Boeing 757 passenger fleet will eventually be converted into cargo aircraft. Except for the short-lived McDonnell Douglas MD-11 aircraft, almost no aircraft in history has been transformed into a freighter on a large scale like the Boeing 757.
This is mainly because after the epidemic gradually improved, the express delivery industry also ushered in a new outbreak period. During home isolation, the epidemic pushed the public, especially consumers in sinking markets, to develop online shopping habits. Presently, Amazon Airlines has nearly 40 wide-body cargo aircraft, and another 10 are waiting for delivery. Alibaba, through its Cargo logistics department, has cooperated with Silkway and Volga-Dnepr to prepare for the Boeing 747 and other large-capacity freighters.
The Civil Aviation Administration has set up a leading group to promote the development of the aviation logistics industry. Focusing on the protection of the international supply chain of China ’s industry, guaranteeing the transportation, and supply, it has launched the reduction of the cost of international air cargo, the improvement of the efficiency of the approval of cargo flights and the encouragement of airline measures to improve the capacity of international air cargo transportation including "passenger to cargo".
Generally speaking, the impact of COVID-19 is massive in 2020 all over the world, however, how quickly the speed of manufactory recovery is obvious, we look forward to the recovery of cargo aviation in 2021.