Global logistics firms battle for air superiority

Workers unload freight for SF Express at Xingdong Airport, Nantong, Jiangsu province. [Photo/China Daily]

Global logistics companies are battling in China's skies alongside the booming air express industries. And, the growing demand for speedier delivery is driving logistics development across China, including its smaller and more far-flung towns and cities.

China's civil aviation authorities have approved the plans of industry leader SF Express Group Co, established 23 years ago by Shun Feng Airlines, to build an airport in Ezhou, a city in central China' s Hubei province, that will be the world's fourth international air logistics hub and the first in Asia.

The firm, which had set up a strong air cargo transport net-work by 2009, has 30 aircraft, including China's first wide-body Boeing 767. And, it is set to expand its fleet as it aims to become a global logistics enterprise.

Both SF Express and Shanghai YTO Express (Logistics) Co Ltd, the second Chinese private express firm to acquire an aircraft fleet, are also facing competition from global giants such as the US-based Fed-Ex Corp.

According to the China Express Association, business volume last year hit 20.6 billion deliveries and total revenue was 276 billion yuan ($41 billion)-a year-on-year growth of 48 percent and 35 per-cent, respectively. Since 2011, the express sector has grown at an average annual rate of more than 50 percent. Air freight has increased rapidly and now accounts for more than half the total volume of express delivery-sometimes up to 70 percent.

"The pursuit of speed is the mission of the express industry. So, its development is tied to the development of air transport," said Zhang Yuzhou, director of industry development at the association.

International giants, domestic enterprises, e-businesses, aviation companies and investors are targeting the China logistics market.

But, China's vast territory requires the industry to build air transport infrastructure to serve the more remote areas of the market. The development of FedEx in the United States is often cited as an example for China, as both countries have huge territories.

The government has issued guidelines on promoting the development of the general aviation industry. They outline how China will build more than 500 airports by 2020 to ensure that all major and prefecture-level cities have access to general purpose air transport.

"China's central and western regions and many second-and third-tier cities are a rising market for short and medium-distance air express," said Bill Schultz, senior vice-president, business development China, for NewYork-listed aircraft maker Textron Inc. "Small and medium-sized general aircraft, especially multipurpose aircraft, are better for transporting cargo to these cities."

Zhong Guoyi, vice-president of international express of FedEx China agreed, saying the logistics giant has a 24-hour North American air transport network with a well-serviced fleet of major air-craft and small and medium-sized cargo planes.

"We have fleets of aircraft and cooperate with independent operators to service different markets," he said.

FedEx has shown that success in logistics depends on an airport net-work in different regions, including different-sized airports for general aviation, said Professor Jeffery Towson from the Guanghua School of Management at Peking University.

"The one who builds networks of airports and various runways suitable for the different aircraft will take the initiative," said Towson. "As a result, express will drive economic development with the improvement of air transport."

Xinhua