Courier companies expanding air services
November 29, 2012 Category Express delivery, Logistics
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.
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