Chinese cargo growth leading the recovery worldwide but some challenges ahead

With China’s GDP surging in the first half of 2010 in response to a stronger global economy, it is no surprise that the Chinese air freight market is going from strength to strength, as the country’s manufacturing sector recovers at a cracking pace following the global financial downturn. But the Chinese air freight segment, still in its formative stages, is highly fragmented. At the beginning of the year, the CAAC stated it would focus on the development of the country’s cargo industry and encourage cargo airlines to undergo mergers and acquisitions, restructuring and business cooperation. Furthermore, in its Development Strategic Plan, the CAAC stated it plans to develop at least one internationally competitive airline company and one internationally competitive cargo airline by 2030. In this article, we review the most recent developments of China's air freight market participants. [7384 words]

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This report contains the following subheadings:

• Demand back to pre-crisis levels
• Overcoming the problem of fragmentation
• ‘Big Three’ cargo consolidation on the cards?
• China Southern expanding through commercial agreements
• China Eastern restructuring freight operations
• China Cargo Airlines reports first profit since 2005
• Air China and Cathay Pacific looking to launch cargo JV
• Cathay Pacific cargo operations “looking good”
• Developing cargo hub at Hong Kong
• Cathay expanding freight route network
• HNA Group expanding its freight interests
• Hainan Airlines targeting 8.2% rise in cargo volumes for 2010
• HNA establishes new logistics subsidiary
• Hong Kong Airlines to separate passenger and cargo operations
• China Postal Airlines proposes cost control measures
• Jade Cargo applies to operate to the US
• Express Freight carriers expanding Chinese bases
• UPS basing more aircraft in China and Hong Kong
• FedEx optimistic for growth between Asia and Europe
• TNT taking advantage of Chinese route strength
• DHL’s Asia Pacific growth leading the way
• Foreign carriers also report strong results from China

This report contains the following charts and tables:

• Freight tonne kilometres (FTKS) by region: May-2010 to Jul-2010
• China air freight volume and growth (% change year-on-year): Jun-2009 to Jun-2010
• Chinese carriers operating freight services
• Big three airlines freight volumes: Jul-2009 to Jul-2010
• China Southern freight volume and growth (% change year-on-year): Jun-2009 to Jun-2010
• CAAC East China Regional Administration member airports cargo volumes: Jul-2010
• CAAC East China Regional Administration member airports cargo volume growth (% change year-on-year): Jul-2009 to Jul-2010
• China Eastern cargo volume and growth (% change year-on-year): Jul-2009 to Jul-2010
• Air China cargo volume and growth (% change year-on-year): Jul-2009 to Jul-2010
• Key details of the agreement are as follows
• Cathay Pacific cargo and mail yield (HK cents): 1996 to 1H2010
• Hong Kong International Airport cargo volume and growth (% change year-on-year)
• Shenzhen Airport cargo volume and growth (% change year-on-year): Jul-2009 to Jul-2010
• DHL 1Q2010 revenue growth by region (% change year-on-year)
• DHL express division 2Q2010 revenue development