China Cargo Market Seen to Boom

Insiders said China’s cargo
carrying market will see a boost, despite the losses that some domestically
listed carriers reported in the first-half year. This Monday, the Shanghai-based Eastern Airlines posted a profit warning and
partly attributed it to the poor performance of China Cargo, its cargo unit
and China’s only cargo carrier expect the government-department-turned China
Post. But insiders said the situation is soon to improve, as cargo business will be
the aviation industry’s new source of profit. Yu Aihui, vice director with the Civil Aviation University of China said the
cargo business, a crucial part for the international aviation industry, is
undeveloped yet here, but the potential is huge. Citing statistics, she said
China will likely make a yearly 7.3 percent growth in the following years,
while the world-wide rate will average at 5 percent. The huge market in China has attracted multinational parcel carriers here. Statistics indicated nearly 60 overseas air companies are providing cargo
services in some 40 cities across the country. Among them are the US-based UPS
(United Parcel Service) and Fedex. Moving in from 1984, UPS had developed the Chinese cities it served to 190 by
April, and operates 11 flights each week to and from China. It is setting up
its largest express mail center in Shanghai’s Pudong International Airport. China is also the critical market for UPS. The air company reported a 15
percent increase in last year’s business in the Asia-Pacific region, in which
the growth in China was 45 percent, UPS’ spokesman said. Its service covers 120 cities throughout China. Domestic carriers are gearing up to sharpen the edges in the heated
competition. For example, China Post has purchased three more cargo jets, and Shandong
Airlines has announced the plan to build a 200-mu (13 hectares) air cargo
center and to put the two newly-added B737 cargo jets in operation from
September. China’s flag carrier Air China is also said to launch a cargo shipping
company, as part of its restructuring program, and will probably announce the
details of the subsidiary company plan in a month, according to the
homeway.com. The Southern Airlines, one of the three carriers besides the Air China and
Eastern Airlines, said to be most suitable to launch a cargo unit for they
hold the major international routes in China, has ruled out the possibility to
start a cargo company. That’s because the cargo business accounts for about 9 percent of its total
sales, according to Su Lian, secretary to the company’s board director. Generally speaking, it will be beneficial to launch an independent cargo arm
when the air company’s cargo sector takes up 20 percent or above of its total
business.
From China Traffic News, Page 8, Wednesday, August 01, 2001
[email protected] Copyright (C) 2001 Alestron, All rights reserved -0-
KEYWORD: CHINA
INDUSTRY KEYWORD: Marketing
Investment
SUBJECT CODE: General News and News in Other Industries ALESTRON DAILY NEWS, 03rd August 2001