Air Cargo Spotlight: China

 

Global Outlook for Air Cargo

With the continual need to move air cargo more cost-effectively and faster than ever, this industry is in the midst of sweeping changes and significant transformation.  According to the report: “Air Cargo Market to 2027 – Global Analysis and Forecasts by Type; Service; and End User” (Source: Research and Markets), the global air cargo market was valued at $102 Billion in 2018 and is projected to grow at a CAGR of 4.1% during the period 2019-2027.  It is likely to touch $145.20 Billion by 2027.

Airfreight is the preferred mode of transport for the new global economy’s high value-to-weight manufactured goods such as pharma, microelectronics, aerospace components and medical devices, as well as in cases of humanitarian & relief, heavy & outsize, dangerous goods, livestock, oil & gas etc.

China

China is one of the most dynamic air cargo markets in the world.  It has rapidly become the world’s top nation in terms of manufacturing output, with key industries producing commodities such as apparel, computing, electronics, telecom equipment etc.  A large amount of these goods are intended for export and are transported by air.  China also exhibited an upward growth in this sector due to its growing economy and the emerging middle class, which drive migration from an investment-driven model to a consumption & services driven model.  That’s not all.  The country witnessed the world’s largest & fastest growing e-commerce market worth $1.53 trillion in 2018.  It is especially exciting and is helping fuel demand for air cargo freighters.  According to Boeing, China will require 200 additional air cargo freighters and 470 converted freighters over the next 20 years.

In May this year, Atran Airlines, the Russian express services carrier within the Volga-Dnepr Group, introduced a new route in its network that connects Hangzhou in China with Riga in Latvia to cater to Hangzhou’s position as emerging technology hub and key gateway in China’s burgeoning e-commerce industry.  With 23-ton cargo capacity, the Boeing 737-800BCF, will cater to Alibaba e-commerce consignments carried on the Cainiao Network, the logistics arm of the Alibaba Group.  In the same month, Saudi Airlines Cargo also introduced a weekly freighter service to Guangzhou, operated by a Boeing 747-400F, with about 100-ton capacity in order to enhance and increase trade activities between the Kingdom and China’s key trading port & transportation hub.

Between 2007 and 2017, average annual air cargo growth in China’s domestic sector averaged 5.0% and was projected at 6.3% between 2018 and 2037.  This was the highest compared to any other region with Intra-East Asia projected next at 5.8%.  China accounts for 50% of trans-pacific air cargo market.

However, just like any other industry, the air cargo industry is subject to the effects of important changes in the global economy, exchange rates and other factors.  Escalating trade tensions, particularly between the United States and China, have buoyed uncertainty and may hurt cargo demand.   Nevertheless, the outlook looks positive in favor of a parabolic growth of the industry.

2019-07-09T05:36:50+00:00