Turbulence in China’s air cargo market

When it comes to freight forwarding, mainland Chinese airlines are their own worst enemies, and over the years they have acquired a reputation for being unreliable and unethical which has resulted in foreign carriers securing a lion's share of the mainland's international air cargo market, the South China Morning Post reported.

In an attempt to redress this imbalance the government wants the cargo divisions of its major carriers - Air China, China Eastern Airlines and China Southern Airlines - to merge.

However, international freight forwarders who employ carriers on behalf of major western importers, say the move is unlikely to persuade them to stop shunning the mainland's cargo airlines.

Several such air cargo joint ventures have been set up over the past few years, including Jade Cargo Airlines, a venture between Shenzhen Airlines and Lufthansa; Great Wall Airlines formed by Singapore Airlines and China Aerospace Science and Technology Corporation; and Galaxy International, a venture between Sinotrans Air and Korean Air.

Meanwhile, Cathay Pacific Airways and Air China are awaiting approval from mainland government to set up their cargo joint venture.

There are no official figures on how the market share of air cargo among mainland and foreign carriers but a publicly accepted ratio is 70/30 percent in favour of the foreigners.

Beijing wants the mainland carriers to increase their market share by consolidating their resources and injecting capital into the new joint venture to beef up their freighter fleets.

Having limited fleets has curbed the development of the big three mainland airlines' cargo units in the past five years.

Other areas where mainland carriers lag behind their international peers are management, on-time performance and logistics.

Lack of comprehensive networks and local distribution services have lengthened delivery times. Because mainland carriers only fly to a few major cities in Europe such as Frankfurt, London and Paris, shipments bound for secondary cities such as Leon or Nice, have to rely on local trucking services, which are fraught with delays and heighten the chances of damage occurring.
(Source:www.cargonewsasia.com)