JD Logistics takes on air cargo, freight competition

Courier firm gains approval from CAAC to put self-owned fleet into operation

JD Logistics, the logistics arm of Chinese e-commerce giant JD, has obtained approval from aviation authorities to put its self-owned air cargo fleet into operation, a key move expected to help JD boost its long-haul freight capacity, improve delivery efficiency and ensure the stability of supply chains, industry experts said.

Experts said JD is facing intense competition from local courier companies such as SF Express, YTO Express and Cainiao Network, which have ramped up efforts to build global delivery networks, expand air cargo fleets and strengthen air cargo capacities.

Jiangsu Jingdong Cargo Airlines Co Ltd, an affiliate of JD Logistics, received permission from the Civil Aviation Administration of China on Wednesday. The company, based at Nantong Xingdong International Airport in Jiangsu province, will be engaged in domestic and international air cargo transportation, serving industries such as high-end consumption, high-end manufacturing, medical care and fresh produce.

JD Logistics said the carrying capacity of each airplane will be 23 metric tons, without disclosing the number and type of aircraft that will come into operation. The company said it hopes to gradually expand the scale of its air freight fleet on the premise of ensuring safe operation.

The company will develop its domestic air freight business in the Yangtze River Delta region, the Bohai Economic Rim area and the Pearl River Delta region in the preliminary stage, with a focus on the cities of Nantong and Wuxi in Jiangsu province, Beijing, and Shenzhen in Guangdong province, and plans to cover more major cities across the nation by the end of 2025, according to JD Logistics.

In addition, it will accelerate the layout in international air cargo markets such as North America, Europe, the Middle East, Southeast Asia, Japan and South Korea by the end of 2025.

Yang Daqing, deputy director of research at the China Federation of Logistics & Purchasing, said currently, air cargo occupies a relatively small portion of China's comprehensive transportation system, which cannot meet consumers' fast-growing demand for high-tech products as well as cold chain logistics services covering the transportation of fresh commodities and medicine.

"The shortage of air cargo capacity, specialized air cargo enterprises and hikes in transportation costs have become acute amid the COVID-19 pandemic," Yang said, adding the permit to operate an air cargo fleet will help JD enhance delivery efficiency, especially in the cross-provincial and cross-border logistics segment, boost its long-haul freight capacity and ensure smooth operation of supply chains.

In 2018, JD signed a strategic partnership with the local government of Nantong to build Nantong Xingdong International Airport into an air cargo hub for JD Logistics. The company got the nod from aviation authorities to set up its own freight airline in August 2021.

Other logistics firms have invested heavily in providing air cargo services. SF Airlines, the aviation branch of express delivery giant SF Express, has been expanding its freighter fleet. The fleet size of SF Airlines reached 73 aircraft after a Boeing 757-200 freighter was newly introduced in July.

The company will continue to introduce long-range widebody freighters to strengthen its air cargo capacity in the second half, and support the construction of the country's air cargo hubs, said SF Airlines. YTO Express, another parcel delivery company, said the number of its air cargo fleet will reach about 20 aircraft by the end of next year.

"The operation of cargo aircraft will be a vital supplement to JD's current supply chain and logistics system, as air freight transportation could forge greater synergy with the company's Asia No 1 intelligent logistics park, warehousing and sorting centers to build an integrated logistics and delivery network," said Han Tao, a researcher at the China Air Transport Association.

In addition, JD's latest move will also propel other air cargo carriers to continuously expand more cargo routes, optimize freight capacity and improve service quality, Han added.

China's air cargo traffic returned to normal recently after posting a V-shaped recovery in the first half of this year. In July, the civil aviation industry transported a total of 539,000 tons of cargo and mail, an increase of 28.3 percent compared with April, according to the CAAC.

JD launched two chartered cargo flights from China to Brazil and Germany in March. The flights transport a variety of e-commerce goods from China, including fast-moving consumer goods, sports equipment and digital accessories. Goods are shipped to China on return flights, facilitating cross-border trade.