由 caicai8478 According to IATA data and analysis, approximately 80% of cross-border e-commerce goods are transported by air. Currently, e-commerce cargo accounts for 20% of global air freight, and this figure is projected to grow to 30% by 2027.
Driven by the demand for cross-border e-commerce, the air cargo industry has undergone structural changes, providing a significant and rare opportunity for the industry, particularly for China’s air cargo and express delivery sectors.
Video of Dai Jianbin’s Summit Speech
At the 7th Cross-Border E-Commerce Logistics Trends Summit, Dai Jianbin, Director of Sales for Boeing Commercial Airplanes Greater China, delivered a keynote speech titled “Global Air Cargo Trends in the Context of Cross-Border E-Commerce.”
01
Global Air Cargo Trends
By weight, air cargo accounts for less than 1% of global trade, but the value of the goods it transports accounts for approximately 35% of global trade. From a national perspective, developing air cargo requires relatively little investment, yet it can play a vital role in international trade and national logistics security.
With the continuous growth of cross-border e-commerce, the composition of goods transported by air cargo is also changing. In the past, air cargo was primarily characterized by high value and time-sensitive cargo. However, thanks to the innovation and efforts of cross-border e-commerce platforms such as SHEIN, TEMU, AliExpress, and TikTok Shop, a wide range of daily necessities, clothing, and other goods can now be transported via air cargo, and air cargo has become a key factor in the success of these platforms’ business models. The product range and variety of goods transported by air cargo have expanded significantly.
The global air cargo industry, with an annual output value exceeding US$125 billion, is primarily comprised of four types of companies: express delivery companies (FedEx, DHL, UPS, etc.), combined passenger and cargo airlines (China Southern Airlines, China Eastern Airlines, etc.), dedicated cargo airlines (Cargolux, ATLAS, etc.), and passenger airlines that exclusively provide cargo services in the belly of passenger aircraft.
Chinese cross-border e-commerce platforms and logistics companies are quietly but relentlessly exploring various transportation options and leveraging diverse transportation resources to meet the growing demand for cross-border e-commerce transportation. This also led to the diversion of cross-border e-commerce goods to all types of companies, resulting in a relatively fragmented and small scale of cross-border e-commerce logistics companies. This resulted in some key stakeholders in the air cargo industry, such as major cargo airlines, freighter manufacturers, airports, financial institutions, and government agencies, failing to proactively prioritize and support cross-border e-commerce logistics.
It wasn’t until 2023, when the surge of cross-border e-commerce goods emerged from the bleak post-pandemic air cargo market, driving a recovery in air cargo, that key stakeholders fully recognized the significant impact of cross-border e-commerce logistics on the air cargo industry and the enormous opportunities and challenges it presented.
As a vital component of international trade, air cargo’s long-term development trends are closely linked to global economic development. The long-term growth drivers of air cargo volume include:
First, GDP, goods trade, and industrial production are key drivers of air cargo growth.
Second, driven by diversified and de-risked supply chain strategies, some Asian countries, such as Vietnam, Thailand, and Malaysia, are gradually increasing their market share from East Asia to the US. These changes in international export volumes reflect shifts in the global supply chain.
Third, the growth of e-commerce networks has structurally altered air cargo. The rapid development of e-commerce has enabled an increasing number of goods to be traded cross-border via air transport, significantly boosting the growth of international air cargo. Cross-border e-commerce packages are typically small, relatively high-value, and time-sensitive, making air transport the preferred mode of transportation.
Following the cyclical fluctuations of the global economy and its long-term growth trend, the air cargo market has experienced both volatile and long-term growth. Each economic shock, such as the financial crisis, the European debt crisis, the Sino-US trade war, and the COVID-19 pandemic, has had a significant impact on the air cargo market. However, quarterly data from the past decade or so reveals that the global air cargo market is remarkably resilient. The sharper the decline, the greater the rebound, and the more swiftly it recovers after experiencing short-term shocks, achieving retaliatory growth. For example, during the financial crisis, the market experienced a drop of nearly 22% at its lowest point, followed by a resurgence of approximately 30% at its peak.
Image source: Boeing
As shown in the air cargo growth trend chart above, air cargo is undergoing a rapid recovery. Data from consulting firms such as the WTO Global Trade Outlook and S&P Global Market Intelligence indicate that global trade, industrial production, and retail sales are gradually recovering in 2024 relative to 2023, signaling a resumption of growth in traditional air cargo volumes.
At the same time, the US has concluded its destocking cycle and is now entering a period of inventory accumulation. This destocking cycle has a particularly significant impact on air cargo demand. When businesses are destocking, demand for air cargo plummets. When companies need to replenish inventory, they often rely on air cargo for fast and efficient transportation.
Furthermore, traditional air cargo services, such as the transportation of mobile phones, computers, and semiconductors, are also important drivers of air cargo demand. This is particularly true in the semiconductor industry. Taiwan’s semiconductor production has already recovered from its slump and is showing signs of recovery. This suggests that traditional air cargo is likely to be recovering for some time to come.
As traditional air cargo recovers, coupled with the rapid growth of cross-border e-commerce, international air cargo will face both significant opportunities and challenges. Extremely limited capacity increases will disrupt the balance between supply and demand, drive up freight rates, and hinder the healthy development of cross-border e-commerce.
However, IATA data shows that global capacity will grow by 11.3% in 2023, while demand will decrease by 1.9%, clearly indicating a supply-demand imbalance. So why did air cargo capacity become scarce in the second half of 2023, causing charter prices to soar to levels not seen during the pandemic?
A key factor is that increased bellyhold capacity has limited support for cross-border e-commerce cargo. While the industry added significant bellyhold capacity in 2023, the increase in freighter capacity was minimal. Cargo and passenger flows differ, so available bellyhold capacity may not be able to effectively meet air cargo demand.
Image source: Boeing
In summary, traditional air cargo demand is likely to recover in 2024. Combined with the rapid growth in cross-border e-commerce demand, this will drive rapid growth in air cargo demand. On the capacity supply side, large freighter capacity has so far seen minimal growth, making it difficult to achieve a truly effective increase in capacity.
Delays in large freighter deliveries and certification of large passenger-to-freighter conversions, coupled with the impending retirement of hundreds of aging large freighters, will create numerous challenges for large freighter capacity supply in the coming years. Even during this year’s traditionally low air cargo season, freight rates have already seen significant increases.
Both air cargo and cross-border logistics companies must proactively anticipate capacity allocations for 2024. Seizing opportunities from recovering demand while addressing capacity supply challenges will be key tasks for the coming years.
02
Opportunities for Chinese Air Cargo
Leveraging its robust e-commerce demand, comprehensive logistics system, and the long distances between US economic centers, which are well-suited for cargo transport, Amazon has established a robust domestic air transport network in the US, with a fleet of over 100 freighters, primarily 767s. This ensures rapid delivery and timely fulfillment for Amazon’s US e-commerce services, creating an insurmountable competitive advantage in the mid- to high-end e-commerce market. By November 2023, Amazon’s package delivery volume surpassed that of FedEx and UPS, demonstrating the formidable power of e-commerce logistics. This offers enormous potential for e-commerce logistics, especially cross-border e-commerce logistics.
Of course, many people wonder why Amazon doesn’t establish an intercontinental air transport network. Perhaps due to different market positioning and business models, Amazon doesn’t focus on cross-border e-commerce freight demand, and a stable and controllable intercontinental route network is not currently a core concern for Amazon.
Unlike Amazon, cross-border e-commerce platforms like SHEIN, TEMU, AliExpress, and TikTok Shop, which are based on Chinese manufacturing capabilities and primarily serve mid- to low-end customers in Europe and the United States, see logistics costs accounting for roughly one-third of their total costs. Their survival and development, compared to Amazon, relies more heavily on sufficient air transport capacity and reasonable air freight rates.
Capacity shortages and rising freight rates pose a threat to their business growth and the viability of their business models. Whether through strategic partnerships or self-developed capacity, sufficient and cost-effective transport capacity is a key factor in the rapid development of cross-border e-commerce platforms.
Dai Jianbin, Director of Sales, Greater China, Boeing Commercial Airplanes
Over the past six months, mainland China’s average international cargo volume has grown by over 30% annually. Domestic airlines primarily source their cargo from e-commerce platforms, leaving them with insufficient capacity to meet international cargo demand. The long-haul capacity of Chinese cargo airlines accounts for less than one-third of mainland China’s air cargo demand.
A significant amount of air cargo has been forced to seek out longer routes, with over 3 million tons of cargo shipped overseas via Hong Kong, Taiwan, Japan, and South Korea. E-commerce platforms like SHEIN, TEMU, AliExpress, and TikTok Shop have been forced to invest significant financial, human, and material resources in air cargo capacity, a sector they are not particularly familiar with but on which they rely heavily.
Of course, the shortage of international air cargo capacity presents both a challenge and an opportunity. Before the pandemic, air cargo was the least visible sector of the civil aviation industry. The market environment in its home base was relatively poor, and the common perception of some cargo airlines was that they were consistently operating at a loss and experiencing meager profits.
Chinese cargo airlines are extremely limited in their ability to secure high-yield cargo. However, as cross-border e-commerce expands, China’s current fleet of large freighters is insufficient to meet the capacity needs of a cross-border e-commerce platform like SHEIN or TEMU. This presents a significant development opportunity for Chinese cargo airlines, express delivery companies, and cross-border logistics companies.
Take Yuntu Logistics, a subsidiary of Zongteng Group, for example. Yuntu Express utilizes its own 777F freighter to launch a dedicated small-parcel freight route from Shenzhen to Paris, operating six times a week. Yuntu offers stable service and a delivery time of three days, surpassing the time taken by some major international express delivery companies. Beyond its core cross-border e-commerce cargo business, Yuntu has also begun targeting high-value-added international express delivery services, offering superior service at half the price. This express delivery model for e-commerce logistics will gradually expand and replicate.
Therefore, large cross-border logistics companies like Yuntu, domestic express delivery giants like SF Express, Postal Airlines, YTO Express, and ZTO Express, and logistics companies affiliated with major platforms like Cainiao all have the opportunity to capitalize on the opportunities presented by cross-border e-commerce cargo, expand their international cargo routes, and develop comprehensive international e-commerce express delivery services. Perhaps in the next five to ten years, China may see the emergence of several express logistics giants capable of fully competing with FedEx and UPS.
Cross-border e-commerce will fundamentally alter the landscape of air cargo between China and other countries, shifting cargo ownership from US retail giants to Chinese e-commerce platforms. Purchasers of air cargo capacity will shift from being controlled by import and export traders and foreign retail giants to increasingly Chinese cross-border e-commerce platforms or logistics providers. This shift in freight purchasers will fuel demand for cargo capacity in China, laying a solid foundation for Chinese cargo airlines to play their due role and gradually increase their market share.
Therefore, China’s shortage of large freighter capacity has already constrained the development of cross-border e-commerce and its export economy. China needs over a hundred large freighters to prevent capacity constraints from hindering the development of cross-border e-commerce and its export economy.
In the coming years, China’s air cargo sector will require not only government-level supportive policies to drive rapid development and align with China’s export strength, but also relevant companies that seize the market opportunities presented by the rapid growth of China’s cross-border e-commerce. They should not only develop air cargo networks to support this growth, but more importantly, leverage these opportunities to expand and strengthen their express delivery capabilities, achieving a leapfrog development and establishing several express delivery companies that surpass FedEx and UPS.
We hope that, against the backdrop of global capacity upgrades and continued growth in market demand, China’s air cargo industry will achieve rapid growth and play a role commensurate with China’s export strength.