China will push for further liberalization of its air cargo market because it is vital to facilitating trade flows and expanding its economy. “China, as the biggest exporting country in international trade, relies heavily on the air cargo business. We are actually taking a proactive attitude towards air cargo liberalization,” said Han Jun, Director General of the International Affairs Department of the Civil Aviation Administration of China (CAAC) at the first Air Cargo Development Forum organized by the International Civil Aviation Organization (ICAO). International cargo traffic turnover accounted for nearly a third, or 21.07 billion ton-kilometers, of China traffic turnover of 67.17 billion ton/km last year. China’s international cargo business soared between 1980 and 2008 before it was hit by the financial crisis. It showed signs of recovery last year, when international traffic grew 8.3%. “We will lower access requirements as appropriate and also encourage Chinese airlines to expand their international routes to more domestic points, and work with foreign operators to create international routes,” Wang Zhiqing, Deputy Administrator of CAAC, said. China has signed air service agreements with 115 countries and regions, of which 21 have introduced unlimited capacity entitlements for all cargo services. The China-U.S. air traffic agreement has for the first time introduced the concept of air cargo hub operators, which are entitled to the seventh freedom traffic right – the right to operate between two points with neither being the airline’s home country. It is the only such arrangement China has reached with another country.

Cathay Pacific, one of the world’s largest cargo carriers, is hoping the Christmas season will start a little earlier this year. The last quarter, traditionally a peak season for cargo, may signal the start of a real recovery for the sluggish global cargo market thanks to new hi-tech consumer product launches and recovery in the U.S. economy, said Cathay’s Cargo Director James Woodrow. Speaking to the South China Morning Post in Zhengzhou, he said there was a good chance Apple’s iPhone 6 will help improve not only the China market but also the Hong Kong market. Mainland China is Cathay’s largest cargo market after Hong Kong, while “almost everything” it ships from Hong Kong comes from the Pearl River Delta, Woodrow said. But to Cathay the U.S. market is still more important than China. “I think critical to global cargo growth is growth in the U.S. economy. The more the U.S. and global economy accelerates, the faster our load factor will grow,” Woodrow said. Tonnage at Cathay Pacific and Dragonair increased 8.5% to 804,000 tons in the first half of the year, but there was a 6.9% decline in yield – per unit profitability. Airlines have had cargo yields eroded by overcapacity and weak demand, while the growth of belly space in passenger jets adds further cargo capacity.

The increase in online sales has led to soaring demand for delivery services. In 2013, some 1 billion parcels were delivered in Shanghai alone, with a total revenue of CNY25.8 billion. Every day, about 100,000 couriers crisscross the city. A Shanghai resident received an average of 39 parcels last year. About 70% of the nation’s express companies have their headquarters in Shanghai, including leading courier firms SF, STO, ZTO and Yunda Express. Service quality remains a work in progress. Many people have had bad experiences with couriers – the loss of packages, refusal to deliver the package at the door or a rude attitude. The government plans to launch a campaign to regulate such firms within three years, and “black and red lists” will be released so residents can evaluate the firms based on criteria such as manners, service, integrity, standards and facilities. Both lists will be released by the end of the year. Delivery personnel will be required to have licenses. Customers’ complaints to the Postal Administration often lead to punishments for the courier firms. Most couriers earn CNY1 per parcel delivered, while others earn a fixed salary of CNY3,500 a month.

Six domestic express delivery companies are being investigated for alleged collusion after they raised their rates simultaneously in Chongqing. The six companies held several meetings earlier this year to discuss an increase and decided to raise their rates simultaneously on August 1. Delivery companies involved in this case include the Chongqing branches of YTO Express Co, ZTO Express Co, Yunda Express Co and TTKD Express Co. Because of the size of these companies, their action amounts to a pact to control market rates and violates China’s price law. The Chongqing Price Bureau has ordered the six companies to stop charging the higher rates or face fines and other administrative action. YTO Express said that the increase was imposed independently by its franchisee in Chongqing and the corporate headquarters in Shanghai was not aware of the move until the Chongqing authorities acted. Zhang Qizuo, Professor at Chengdu University specializing in the service sector, said it is hard for express companies to get orders in China’s southwestern logistics market, where consumers usually call the cheapest company to deliver their packages or documents.

China’s express delivery companies and their e-commerce partners have been forced by high costs to pull back from door-to-door delivery and instead ask customers to pick up their packages to keep shipment prices low and remain competitive. Taobao, the customer-to-customer online trading platform of Alibaba, launched a self-pick-up service in Hong Kong in late August, allowing consumers to choose from 200 pick-up points, including the 125 post offices in Hong Kong, for their shipment options. Picking up purchased goods instead of requesting door-to-door delivery may save consumers more than 50% in shipping costs. Delivery industry analysts feel the “self-pick-up solution” is an option Taobao and its logistics partners were forced to take. “As Taobao expands outside China, with Hong Kong as the first key overseas market, it realized managing logistics capacity is a challenge,” said Gary Ng, Chairman of the Hong Kong Courier Association. Taobao’s registered users in Hong Kong reached 1.4 million at the end of 2012, comprising almost one fifth of the city’s population. China’s express delivery companies delivered 9.2 billion pieces of goods in 2013, up 61.5% over 2012 and ranking it No 2 in terms of business volume after the United States, the South China Morning Post reported.