Tough times for nation's airfreight industry
China's airfreight industry has been suffering since the onset of the global financial crisis in 2008, although the industry showed some signs of improvement in demand during the first eight months of the year.
Global demand began increasing slowly in April, in line with strengthening business confidence, according to a report from the International Air Transport Association.
But airlines in the Asia Pacific region "have not seen any improvement in demand, and in fact have experienced a 1.9 percent contraction in freight ton-kilometers during the first eight months of 2013", IATA said.
Domestic airlines are trying to find ways to address the situation.
Liu Jian, manager of the cargo business department at the Dalian branch of China Southern Airlines Co Ltd, recently visited some cities between Dalian, Liaoning province, and Guangzhou, Guangdong province, to look for more transfer points for his company's cargo flights.
"Connecting flights can take more goods, as each route will be shorter, meaning that less fuel has to be carried," Liu said.
China Southern Airlines, which transports 70 percent of the seafood originating in Dalian, carried only 4,259 tons of seafood in the first half year of the year, 1,000 tons less than in the same period of 2012.
"The lost income from the 1,000 tons of seafood possibly represents 5 percent of the branch's total cargo income in the whole year," said Liu.
The limited capacity of airfreight planes is one of the reasons for the reduction, he added, and having more connecting flights could be a solution.
The sluggishness seen in emerging markets, especially the deceleration of China's growth in the first half of the year, is the reason behind the carriers' lackluster performance.
Chinese airlines' net profit also dropped slightly during the first nine months of 2013.
Air China's net profit was 4.39 billion yuan ($717 million) during the first three quarters of 2013, dropping from 4.69 billion in the same period of 2012, according to Air China's finance report released on Tuesday.
China Eastern Airlines also saw net profit of 3.59 billion yuan in the first nine months of 2013, a slight reduction, from 3.63 billion yuan in 2012, the carrier said in its finance report.
Due to the economic growth slowdown, Chinese airlines' income from cargo declined, although their freight volumes still went up slightly.
"The airfreight market remained stagnant in the first half of 2013," Air China Ltd said in an interim report.
The carrier's cargo yield per ton-kilometer decreased 7.6 percent to 1.58 yuan ($0.26) during the period compared with the first half of 2012, while its load factor still increased 0.38 percentage point year-on-year to 57.26 percent.
China Southern Airlines also had the same problem.
In the first half of 2013, China Southern Airlines posted 2.93 billion yuan in revenue from its cargo and mail business, down 6 percent year-on-year, while its cargo and mail volume increased 2.3 percent year-on-year, but the yield per ton-kilometer decreased 8.1 percent year-on-year.
"The cargo demand is still there, but the price is going down significantly," said Leif Nilsson, regional general manager for the Asia Pacific region of Scandinavian Airlines, known as SAS.
In the long-haul market, foreign airlines and logistics companies usually control the business for goods with high added value, some business insiders said, as they have more experience and a rich network of international routes.
"I'm very pessimistic about the airfreight market this year, and I think the market will not recover in the short term," said Zou Jianjun, a professor at the Civil Aviation Management Institute of China.
But airlines in the Asia Pacific region "have not seen any improvement in demand, and in fact have experienced a 1.9 percent contraction in freight ton-kilometers during the first eight months of 2013", IATA said.
Domestic airlines are trying to find ways to address the situation.
Liu Jian, manager of the cargo business department at the Dalian branch of China Southern Airlines Co Ltd, recently visited some cities between Dalian, Liaoning province, and Guangzhou, Guangdong province, to look for more transfer points for his company's cargo flights.
"Connecting flights can take more goods, as each route will be shorter, meaning that less fuel has to be carried," Liu said.
China Southern Airlines, which transports 70 percent of the seafood originating in Dalian, carried only 4,259 tons of seafood in the first half year of the year, 1,000 tons less than in the same period of 2012.
"The lost income from the 1,000 tons of seafood possibly represents 5 percent of the branch's total cargo income in the whole year," said Liu.
The limited capacity of airfreight planes is one of the reasons for the reduction, he added, and having more connecting flights could be a solution.
The sluggishness seen in emerging markets, especially the deceleration of China's growth in the first half of the year, is the reason behind the carriers' lackluster performance.
Chinese airlines' net profit also dropped slightly during the first nine months of 2013.
Air China's net profit was 4.39 billion yuan ($717 million) during the first three quarters of 2013, dropping from 4.69 billion in the same period of 2012, according to Air China's finance report released on Tuesday.
China Eastern Airlines also saw net profit of 3.59 billion yuan in the first nine months of 2013, a slight reduction, from 3.63 billion yuan in 2012, the carrier said in its finance report.
Due to the economic growth slowdown, Chinese airlines' income from cargo declined, although their freight volumes still went up slightly.
"The airfreight market remained stagnant in the first half of 2013," Air China Ltd said in an interim report.
The carrier's cargo yield per ton-kilometer decreased 7.6 percent to 1.58 yuan ($0.26) during the period compared with the first half of 2012, while its load factor still increased 0.38 percentage point year-on-year to 57.26 percent.
China Southern Airlines also had the same problem.
In the first half of 2013, China Southern Airlines posted 2.93 billion yuan in revenue from its cargo and mail business, down 6 percent year-on-year, while its cargo and mail volume increased 2.3 percent year-on-year, but the yield per ton-kilometer decreased 8.1 percent year-on-year.
"The cargo demand is still there, but the price is going down significantly," said Leif Nilsson, regional general manager for the Asia Pacific region of Scandinavian Airlines, known as SAS.
In the long-haul market, foreign airlines and logistics companies usually control the business for goods with high added value, some business insiders said, as they have more experience and a rich network of international routes.
"I'm very pessimistic about the airfreight market this year, and I think the market will not recover in the short term," said Zou Jianjun, a professor at the Civil Aviation Management Institute of China.
