E-commerce drives China's air cargo market

The rise of cross-border e-commerce is lifting the global air cargo market like never before, with China leading the way, boosted by Air Silk Road or air routes that connect the country with the economies participating in the Belt and Road Initiative, industry experts said.

From flowers and fruits to consumer electronics containing lithium-ion batteries, all are par for the air cargo course now, they said.

Besides generating cargo business for airlines, this trend has boosted trade in certain niche sectors like smart wearable and electronic products produced by Chinese enterprises. They are now welcomed by overseas consumers, fueled by a boom in cross-border e-commerce that has sent demand for air cargo transportation soaring.

With innovation enhancing consumer products and consumers pursuing lifestyles characterized by increasing use of "intelligent" products, competition in the global consumer electronics market has intensified, giving superior Chinese products, marked by intelligent and personalized designs, a clear edge, industry observers said.

This, in turn, is spurring the air cargo market. Guangzhou-based State-owned carrier China Southern Airlines said that in the past few years, the international air cargo market has experienced significant changes. A large part of traditional bulk trade cargo transportation has been replaced by cross-border e-commerce cargo transportation.

"The air cargo transportation market has been undergoing constant changes, and cross-border e-commerce business has driven the fast growth of demand for air cargo transportation," said Peter Gao, Boeing's vice-president for China commercial sales and marketing.

In 2023, China's imports and exports of cross-border e-commerce products were worth 2.38 trillion yuan ($328.3 billion), up 15.6 percent year-on-year. Products exported for cross-border e-commerce alone reached 1.83 trillion yuan, up nearly 20 percent year-on-year, according to the General Administration of Customs.

As e-commerce involves products that were not part of traditional trade, new trade models and transportation methods have arisen, spawning new requirements for China's international air cargo services and boosting the nation's capabilities.

For instance, products that contain lithium-ion batteries were hitherto classified as dangerous goods for air transportation. But now, cross-border e-commerce entails transportation of a large volume of such products.

In early June, China Southern operated its first cross-border chartered cargo flight that transported goods containing lithium-ion batteries from Guangzhou, Guangdong province, to London. Those products included electric fans and Bluetooth earphones, marking a breakthrough in China's air cargo transport.

The robust growth of China's cross-border e-commerce has necessitated new international air cargo routes. In late March, Shenzhen Bao'an International Airport launched a dedicated cross-border international freight route connecting Shenzhen, Guangdong province, with Budapest in Hungary. It is the first such route launched this year.

In early April, Chengdu Tianfu International Airport launched its first international air freight route connecting Chengdu, Sichuan province, with Oslo in Norway. The route focuses on transporting cross-border e-commerce products in small packages.

Such links are expected to boost China's trade with Belt and Road economies, which has been growing steadily. In the first quarter of this year, trade with BRI economies exceeded 4.8 trillion yuan, up 5.5 percent year-on-year and 0.5 percentage point higher than the overall growth rate of foreign trade, data from the General Administration of Customs showed.

In the first quarter, China Southern transported nearly 2,800 metric tons of cross-border e-commerce products, electronic products, industrial accessories and agricultural products from Beijing Daxing International Airport to countries and regions involved in the BRI.

The figure was a record high since the new airport in the capital started operations in 2019. This has further promoted economic and trade exchanges between China and BRI economies, the carrier said.

Since March, demand for air cargo to transport fresh flowers to Central and West Asia expanded. China Southern designed an optimal transportation path and provided cold chain services to transport flowers from Kunming, Yunnan province, to Beijing, and then to Central and West Asia.

The carrier has also transported products like cherries from Chile and Tajikistan, salmon from European countries and red wine from Georgia. It said it will continue to increase investments in the air cargo routes connecting China and BRI economies.

"We are confident that Beijing Daxing International Airport will develop into a world-class aviation hub and continue to contribute to the development of the BRI," said Wu Rongxin, deputy general manager of China Southern.

One by one, China's various provinces and regions are seeking to boost trade via cross-border e-commerce with enhanced efforts for better air cargo services. For instance, Central China's Henan province, which did not have an established intercontinental freight route network a decade ago, is now focusing on the rapid growth of Air Silk Road through frequent cargo flights between Zhengzhou and Luxembourg. This has made it possible to transport goods from the province to global consumers, and from other countries to Henan.

Luxembourg-based Cargolux Airlines International, the largest all-cargo carrier in Europe, debuted a new flight in late May that connects Luxembourg with Zhengzhou. In the return direction, it connects Chicago and New York.

The first such cargo flight mainly transported automobile parts, electronic products and daily necessities. The weekly flight used a Boeing B747 freighter. Cargolux operates 18 weekly cargo flights that connect Zhengzhou and other overseas cites.

China began supporting the building of a bidirectional Air Silk Road between Zhengzhou and Luxembourg in 2017. The service range of Air Silk Road now covers more than 200 cities in over 20 European countries and some 90 cities across China, said the National Development and Reform Commission.

Roland Reiland, Luxembourg's ambassador to China, said aviation is an important industry in Luxembourg, and the growing friendship between Luxembourg and Henan has origins in air transportation. He said he believes the two sides will continue to strengthen communications in different sectors.

In addition, Henan has continued to develop its aviation manufacturing sector. With an investment of 1 billion yuan, the first phase of an aviation industrial park in Zhengzhou can manufacture more than 50 sets of simulators annually.

Elsewhere, the International Air Transport Association recently released data on the performance of the global air cargo markets in April, showing strong annual growth in demand into the second quarter.

Total demand, measured in cargo ton-kilometers, rose by 11.1 percent compared to the April 2023 levels. This is the fifth consecutive month of double-digit year-on-year growth. Capacity, measured in available cargo ton-kilometers, increased by 7.1 percent year-on-year, the IATA said.

In particular, Asia-Pacific airlines saw 14 percent year-on-year demand growth for air cargo transportation in April, the strongest in all regions. Demand within the Asia market grew by 13.2 percent year-on-year, and demand on the Asia-Europe route grew by 17.7 percent year-on-year, the IATA said.

"While many economic uncertainties remain, it appears that the roots of air cargo's strong performance are deepening," said Willie Walsh, director-general of the IATA.

"In recent months, air cargo demand grew even when the Purchasing Managers Index was indicating the potential for contraction. With the PMI now indicating growth, the prospects for continued strong demand are even more robust."