Cargo volumes through Hong Kong International Airport are set for a mini-boom in the closing weeks of the year, buoyed by extra pre-Christmas freighter flights. Mark Whitehead, Managing Director of Hong Kong Air Cargo Terminals (HACTL), the largest cargo handler at Chek Lap Kok Airport, said the facility would see a “boomlet” in airfreight tonnage. Charter and scheduled airlines have booked space for an additional 35 freighter flights from early this month to the middle of next month. All will carry export cargo to a number of destinations including Tokyo, Moscow and cities in central Asia. Most of these flights will use Boeing 747s that can carry about 100 tons of freight. HACTL could handle more than 3,500 tons of extra freight by the time the flights end on December 11. By comparison, it handled an average of 4,100 tons of export cargo per day in September, while total volume, comprising exports, imports and transshipments, was 237,761 tons for the month, the highest monthly total since March. Japan’s Nippon Cargo Airlines plans to operate the most flights, with 16 additional departures to Tokyo’s Narita airport between November 1 and 30. Silk Way Airlines, which operates from Baku, Azerbaijan, will make 10 extra flights. There are also extra flights by Qatar Airways, Turkey’s ACT Airlines and Russian carriers Polet Airlines and Air Bridge Cargo. The additional tonnage comes as HACTL was already anticipating better-than-expected growth in cargo volumes after total throughput grew 0.7% year-on-year to more than two million tons in the first nine months of the year. Overall, cargo volume at Hong Kong International Airport rose 0.9% to 3.3 million tons in the first 10 months of this year, Airport Authority figures show. Chief Executive Stanley Hui, said: “Preliminary numbers on cargo throughput in November also suggest a welcome and strong rebound in the year-end peak months. We are cautiously optimistic about cargo performance for 2012 given the arrival of the holiday season,” the South China Morning Post reported.

Four Shanghai courier firms had their licenses for airfreight services suspended because they failed to report inflammable materials in their cargo, causing a small fire on a China Southern Airlines flight after it landed in Dalian, Liaoning province. Police found that inflammable materials, including two lithium batteries banned onboard, led to the fire. YTO, Yunda Express, and the Huixing and Qihang courier firms will have to suspend their airfreight services until they improve their business procedures, the China Air Transport Association (CATA) announced. “All membership carriers of the Association should refuse to transport cargo for the four couriers during the suspension,” said the Association. Most Chinese airlines are members. CATA found the batteries were transported by YTO Express, while the other firms also had concealed prohibited materials.

Chinese courier companies say they are looking at further expansion into air services as competition heats up in the local cargo sector. According to figures from the Civil Aviation Administration of China (CAAC), the country’s cargo and mail throughput rose by 2.5% to 11.58 million metric tons in 2011, and China’s domestic airlines carried 5.58 million tons, down 1% from the year before. CAAC also revealed that in the first quarter of this year, market conditions continued to toughen as cargo and mail throughput recorded by all airports in China decreased 1.4% year-on-year, and half of the 20 biggest airports have experienced negative growth. Experts suggest that Chinese airlines are now likely to make further investments to increase the strength and profitability of their own freight businesses – for example, through mergers and acquisitions (M&As) and the extension of their freight service chain. China Eastern Airlines and China Southern Airlines are both set to establish their own shipping firms by early next year. As a result, some courier operators feel they too have to invest in the air freight market, in some cases buying their own aircraft. One of the most ambitious is Shanghai-based STO Express Co, which said it plans to set up an air cargo unit by acquiring six to eight aircraft next year. Public Relations Officer Shen Tao said that more than 20% of its parcels are now being delivered by air, and as the figures continue to climb, the only sensible move is to invest in its own air fleet. The company’s choice of main air cargo hub is yet to be decided, but it is looking at various options, including Shanghai, Beijing, Wuhan, Chengdu and Guangzhou. Another leading express firm from Shanghai, YTO Express Co, says it is also poised to set up an air cargo service to tap the booming local market. The company has recently filed an application with the CAAC to be allowed to set up its own wholly-owned airline, said Lang Hongfei, Vice President in charge of long-term strategy. The planned airline company will be based in Xiaoshan, Zhejiang province. Lang added that, with 1,000 tons of air cargo per day, an expansion is “imperative” in a market he describes as expanding at “breakneck” speed. YTO Express is still undecided on the number of aircraft to purchase. Until now, it has been leasing three cargo planes to fly between Beijing, Hangzhou and Shenzhen using Yangtze River Express, a cargo airline majority-owned by Hainan Air Group. Air cargo in China is still a relatively new sector. The first private company to start major operations was the Shenzhen-based SF Express (Group) Co, which set up an air cargo venture in 2009 with a single Boeing aircraft. SF now has seven cargo aircraft – five Boeing 757s and two Boeing 737s – and plans to add another 25 Boeing freighters, the China Daily reports.

The Changchun International Logistics Economic Development Zone in Erdao district, Changchun, Jilin province, is the only logistics economic development zone in Jilin. Its gross domestic product (GDP) reached CNY7.9 billion in 2011, three times that of 2006. Its fixed asset investment was nearly CNY9.6 billion last year, nearly six times that of 2006. A series of large trading centers are under construction, such as a home decoration center, a pottery, and a porcelain trading center. Xinglong Bonded Zone is only about 700 meters from the Changchun International Logistics Economic Development Zone, which means much of the resources of both zones can be shared. By 2015, the zone aims to attract 50 large-scale modern logistic companies to set up regional headquarters and realize a GDP of CNY19 billion.

China’s huge and fast-growing logistics market is plagued by high costs, said industry players at the recent Asian Logistics and Maritime Conference. “We hope that after the 18th Party Congress, there will be reforms to resolve problems in the sector,” said He Liming, President of the China Federation of Logistics and Purchasing (CFLP). The Federation has raised its concerns with various government bodies including the Ministry of Commerce, He said. “They have been working on improving it, but the improvement is not perfect, because many government departments are involved.” China’s logistics cost is double that of developed countries, said Liu Wu, founding Chairman of P.G. Logistics Group, headquartered in Guangzhou. “The feedback from our clients is China’s logistics sector must be reformed.” Though the sector had grown rapidly, efficiencies had failed to keep pace, said He. From 2001 to 2010, the value-added by the logistics industry registered 14.8% average annual growth, but what was now needed was high-efficiency growth. During the first three quarters this year, China’s logistics revenue grew 9.6% to CNY130.7 trillion, but its logistics costs rose 11.3% to CNY6.4 trillion, accounting for 18.1% of the economy’s GDP, according to the CFLP. It is cheaper to transport a container from the west coast to the east coast of the United States than from Xinjiang to Shanghai because the container is transported by rail in the U.S. while it is transported by truck in China, said Allan Wong, Chief Executive of OOCL Logistics, a subsidiary of OOCL. “Why are our logistics costs higher than in developed countries? China’s serious logistic problem is the many high fees charged,” said He. China has 90,000 kilometers of toll highways, with some highways charging tolls even after 30 years in operation – long after they had covered their construction costs, he said. China’s logistics costs should be lower than those of developed nations but are driven up by waste, poor planning, and management problems, said Liu of P.G. Logistics. Another reason is the underdeveloped infrastructure in remote regions, which makes delivery to those areas expensive, said Chen Nian, Chief Executive of VANCL, a Chinese e-commerce firm that sells garments online. “The problems in China’s logistics sector are not for the government to resolve. They must be solved by market forces,” he said, as reported by the South China Morning Post.