Author: Mei Ling Tan

Hong Kong International Airport remained at the top of the list of China’s busiest airports in terms of cargo traffic for 2015.

According to statistics, Hong Kong handled a total of 4.38 million tonnes during the year. While this was only a 0.1% year-on-year increase, the airport also maintained its status as the busiest cargo airport in the world for a sixth consecutive year.

In April 2016, the airport authority received approval from the government for its outline zoning plan and to proceed with the reclamation work for the three-runway system. The expansion project, which includes a 3,800, runway, new taxiways and a new passenger terminal, isn’t expected to be completes until at least 2023, and it remains to be seen whether that will further limit the growth of the cargo business.

Next on the list was Shanghai’s Pudong International Airport, which handled approximately 3.28 million tonnes in 2015, a 2.9% growth over 2014.

But flights at the airport are still prone to lengthy delays. According to the Civil Aviation Administration of China, Pudong came last in a ranking of the on-time departure performance of 27 major airports, with just 54.3% of flights departing on-time. 

“We’re trying hard to solve the congestion issues during the day and talking to the air traffic control authorities,” says Xun Meng, deputy general manager of the Aviation Logistics Development Company at the Shanghai Airport Authority. “Unfortunately we don’t have much control over ATC and slots, but as an airport operator, we have the responsibility and duty to fight for what’s best for our customers. So we’re going to try and coordinate slots for cargo by solving one or two issues. For example, we could agree with some domestic airlines to lease or sell their spare or unused slots to cargo carriers.”  

Two other factors that could benefit the development of the cargo business, according to Meng, are the completion of the fifth runway and the optimization of military and civil airspace in the Shanghai area. 

FedEx has been building its own ¥700 million (US$105 million) freight hub at the airport. The necessary inspections will be carried out from July to the end of November 2016. 

“From December to April next year, it will be handed over to FedEx and they will be launching operations,” says Meng. “This hub is located at the western cargo area and will handle mainly international express shipments and cargo in transit.” 

The implementation of e-freight has become an important indicator in the evaluation of the efficiency of airports around the world and is something which Pudong is taking very seriously. 

“This also has very important practical consequences on the development of our hub,” says Meng. “Since we signed an agreement with IATA, Shanghai Customs, the Inspection and Quarantine Bureau, China Eastern Airlines and the e-customs department in March 2015 to promote the digitalization of cargo, we’ve set up and coordinated all the relevant groups and units, agreed on the work flow, and worked hard to roll out the e-freight programme.” 

With the help and support of the customs department, the airport has been running trials on the use of electronic air waybills for imports and encouraged forwarders and carriers to enter into multilateral e-AWB agreements, so that carriers such as China Eastern, Cathay Pacific, Korean Air and Lufthansa can implement e-freight pilot programmes. 

“We’ve made a lot of progress – during the first half of the year, e-AWB coverage at Pudong reached 40%,” says Meng. “More than 10 airlines and 80 forwarders are now part of our e-freight initiative, and more than 100 logistics companies have multilateral e-AWB agreements. We handle more than 30,000 e-AWBs every month, which is the highest in China and the second highest globally.” 

Meng says that China’s readjusted economic growth isn’t a cause for major concern. 

“The easing of the economy actually has benefits for us too,” he says. “We can use this opportunity to reorganize the airport’s facilities, accelerate the upgrade of our infrastructure and enhance our communication with the relevant government departments.” 

The airport also has to standardise its operations and change the traditional way of thinking which places more importance on the passenger side.

“In an environment where there are both opportunities and challenges, we realize that many domestic forwarders and carriers are looking for new trade lanes so we have to become more competitive,” says Meng. “For example, China Southern is constantly improving its high-end products such as temperature control for fresh produce and pharmaceuticals, as well as information and messaging platforms that raise the customer experience. Air China is becoming more and more professional, strengthening its partnership with Cathay to optimize the operation of widebody freighters and improving its hubs at Beijing and Shanghai. China Eastern is turning to the integrated logistics model, looking in particular at developing the e-commerce, express and forwarding businesses.”

Additionally, Meng says that Pudong airport will need to keep up with the development of Shanghai’s free trade zone, and use whatever chances there are to reform further so that it can improve its high-end offering and overall service efficiency.

“We also have to strengthen our cross-border e-commerce markets,” he says. “This is something that we have in common with the free trade zone and it will be extremely important for air cargo going forward.”

In fourth place, Guangzhou Baiyun International Airport’s throughput for the year was roughly 1.54 million tonnes.

In the next 12 months, the airport will be focusing on the consolidation of exports, the long-haul business, the construction of a cold chain hub, cross-border e-commerce and international transhipment, according to Tony Tang, general manager of the Air Logistics Service Company at Guangzhou Baiyun International Airport Co., Ltd.

“We’re in partnership discussions with various companies to establish agreements so that we can work closely together on the commercial, technical and managerial aspects of the cold chain,” he says. “That way, we can strengthen our cold chain infrastructure and promote the growth of the business together. In terms of transhipment, we’ll integrate international and domestic flights so that customers have a wider range of transfer options. 

Guangzhou Baiyun is planning a cross-border trucking service whereby shipments originating in Hong Kong or Macau pass through customs and are trucked to the airport, where they are then loaded onto international flights.

“After this service is enabled at International Cargo Terminal 1, we estimate that Baiyun will receive an additional 2,000 tonnes of international cargo per year,” says Tang. “This will also help to raise our competitiveness in the Pearl River Delta.” 

The airport’s total throughput for 2015 represented a 5.8% year-on-year increase, which Tang says was mainly due to the growth of the international business, which was up 9.6% over 2014.

“Firstly, this came from the increase of freighter flights from Japan, South Korea and the Middle East,” he says. “Secondly, we allocated prime slots to international flights in order to encourage a boost in frequencies.”

Baiyun is planning infrastructural upgrades to improve service quality and efficiency. For example, it will be investing ¥330 million (US$49 million) to build an integrated cargo complex so that customs, inspection and quarantine, warehousing and offices will all be housed under one roof.  

“In terms of software, we’ll be upgrading our cargo IT system later this year,” Tang says. “Customers will be able to make delivery and pickup bookings online, which will help to achieve a paperless process at the terminal. At the same time, we’ll also implement a smart warehousing system so that the location and condition of all the cargo can be tracked and monitored.”

What is posing a challenge for the cargo team at Guangzhou’s airport isn’t necessarily the slowing down of China’s economy, but rather the rapid growth of road and rail transport.

“There is not much room left to grow the air freight market within 1,000km of our airport, so we’re trying hard to develop niche markets such as express and small parcels,” says Tang. “But we still think there’s huge potential in aviation, especially on routes over 1,000km long and transcontinental routes. Compared to the US, which saw a total cargo and mail throughput of about 67 million tonnes, China handled 14 million tonnes, only about 21% of the US total. This shows our potential compared to developed countries.”

The third airport in the Pearl River Delta to be among the top 10, Shenzhen Bao’an International Airport handled a total of approximately 1.01 million tonnes in 2015, ending up with a rank of fifth.

According to Zhengling Sun, deputy general manager of Shenzhen Airport Co., Ltd., an upgrade to the airport’s bonded logistics centre is almost ready.

“We’re now carrying out a renewal of facilities, hardware and software,” says Sun. “We’ve already handed over all the proposals and relevant documentation to Shenzhen Customs, and we plan to be operational later in July.” 

During the year, Shenzhen’s airport added a number of international flights, such as China Southern to Dubai and Sydney, Shenzhen Airlines to Tokyo and Air China to Frankfurt and Los Angeles.

“We would like to introduce more freighter services, but bellyhold cargo on international passenger flights is also a good addition,” says Sun. “We’ll continue to work together with airlines to add more freighter routes, especially international routes and those in support of the Belt and Road Initiative. We’ll attract more airlines to choose Shenzhen through factors such as slots, the customs process, our air logistics policy and our internal management.”

In response to the booming aviation market in China, Bao’an Airport is rolling out a new phase of construction work, consisting mainly of a third runway, a new passenger terminal, a satellite building, a domestic terminal and warehouses for forwarders. Planning and feasibility studies are also being carried out for a new 100-hectare cargo zone at the northern end of the airport. 

Sun says the growth in 2015 mainly came from international and regional routes. 

“We opened a route to Taiwan, and SF Express, China Airlines Cargo and EVA Air Cargo all launched freighter services between Shenzhen and Taipei, with up to 10 flights a week,” he says. “Cargo and mail volume for the Taiwan route increased 95% year-on-year to 43,000 tonnes. Polar Air Cargo, which launched a direct flight to the US in July 2015, also boosted its frequency from one per week to five per week.” 

The new 73,000m² SF Express freight centre, which opened over the course of the year, currently handles about 500 tonnes per day, of which 400 are for SF’s own freighters and 100 are for the bellies of commercial flights. 

More growth is on the way, according to Sun, who says that Shenzhen airport’s international air cargo market is full of potential because Guangdong province is such a huge exporter.

“Against the readjusted GDP growth across the country, Shenzhen has already restructured its economy and cannot be compared with other inland cities,” he says. “Shenzhen’s GDP no longer relies on agriculture, but is instead based on technology and entrepreneurs. The fact that these high-tech products need to be exported brings us many opportunities. 

Zhengzhou Xinzheng International Airport, which stayed in eighth ninth place, handled about 403,000 tonnes in 2015, a year-on-year growth of 8.9%.

To cope with increasing demand, the airport launched operations on its second runway in 2015. The 3,600m runway raised the Zhengzhou airport to category 4F.

“We usually use the first runway for takeoffs, while the second is mainly used for landings,” says Shu Xia Kong, spokesperson for the board of directors at Henan Airport Group. “On average, more than 250 aircraft land on the new runway every day.”

Zhengzhou is well on its way towards being ready for the arrival of Cargolux China, which is scheduled to launch operations from the airport in 2017. A major piece of land is being developed into the northern cargo zone, which is designed to be capable of handling 150,000-200,000 tonnes per year when complete.

“The main functions are to satisfy the needs of international air freight, with plans for a bonded warehouse, a large integrator hub, terminal for other airlines and a cold chain facility,” Kong says. “We’re also planning to construct a taxiway, two access roads and other facilities such as a dangerous goods warehouse and loading and unloading bays that will occupy about 55,000m².”

Cargolux isn’t the only company to have chosen to establish a base at Zhengzhou’s airport.

“China Postal Airlines is going to build a domestic and international sorting centre here which will handle up to 150,000 tonnes per year,” says Kong. “The Dalian Yidu Group, a major fruit trader, has also chosen our northern cargo zone as the site for a cold chain food import distribution centre, which will be capable of handling 200,000 tonnes per year.”

With all this development, the airport is expecting a throughput of 90,000 tonnes for the first quarter of 2016, as well as a total of 450,000 tonnes for the year, according to Kong. 

Zhengzhou Xinzheng recorded the second-highest growth among China’s top 10 airports in terms of throughput for 2015, after Kunming Changshui International Airport, which increased its throughput by 12.2% to about 355,000 tonnes.