One belt, one road… and one sky?

Last week, Andrzej Duda, and Xi Jinping the presidents of Poland and China, signed a bilateral trade agreement just as an inbound freight train from Western China rolled into Warsaw.

However, although the Chinese Government’s “One Belt, One Road” initiative seeks foremost to reestablish historic overland and maritime routes between China and neighboring regions, the influx of investment into aviation infrastructure development also continues as part of One Belt One Road under the government’s 13^th five-year plan. Focus cities have already emerged as strategic links to different regions in China, but today the focus is west-central China where two cities, Chengdu and Chongqing, are vying to develop the most prominent intermodal-logistics hub.

From an overland perspective, both Chongqing and Chengdu offer comparable connections to Western Europe via the Yuxinou Railway. (The three components of the name are derived from the Chinese words for Chongqing, Xinjiang and Europe (Yu, Xin, Ou), the three regions the railway connects.) In 2011, the 11,179 km railway commenced service between Chongqing and Duisburg, in western Germany. Two years later, in 2013, Chengdu and Lodz in Poland were added to the network.

Obviously rail connections offer an option to shippers requiring service faster than ocean freight, but who are unwilling to pay for, or do not require, the speed of airfreight. But air cargo will continue to play a major role for goods which require expedited service between the two regions – in terms of door-to-door shipment time, air outperforms rail freight by a factor of at least four between China and Europe. No surprise then that the Chinese government has recognized the need to add aviation capacity and has outlined plans to add 50 new airports throughout the country as part of its most recent five-year plan.

Looking ahead, how might Chongqing and Chengdu fare when it comes to attracting airfreight?

Perhaps a good place to start is with an analysis of each city’s current capacity and annual airfreight handle. The chart at right shows that even though capacity at Chongqing (CKG) is greater, Chengdu (CTU) had an annual handle nearly double that of Chongqing.

What these figures mask however, is the breakdown between express and general freight, and the dynamic between domestic and international cargo movements at both airports.

Although international airlines (Cathay Pacific, AirBridgeCargo, Qantas, Korean Air, etc.) operate freighters in and out of the region, the lower chart is purposely limited to Chinese carriers and attempts to understand how domestic Chinese carriers strategize scheduled freighter operations at CTU and CKG. (Two notable omissions are China Postal Airlines and China Eastern’s cargo arm, China Cargo Airlines for which weekly route data is unavailable.) Air China Cargo and China Southern Airlines both operate freighters between Europe and Chongqing, yet at present no Chinese Airline has scheduled European departures from Chengdu. When it comes to express flights, Chengdu has the edge with 34 weekly express flights to cities in eastern China.

As recent Chinese express delivery airline start-ups continue to take delivery of new planes, and establish new routes, a clearer pattern should emerge as to which city will ultimately become the more attractive hub for airfreight. For the time being, Chinese government policymakers seem to have already placed their bet on Chengdu.

Earlier this month local officials held a ribbon-cutting ceremony to launch the first phase of construction at the site of Chengdu’s Tianfu International Airport. With a price tag of nearly US$11.7 billion, initial plans for a cargo terminal and three runways are expected to add 700,000 tonnes of airfreight capacity to the region following the project’s completion in 2019. The city’s existing Shuangliu Airport handled 557,000 tonnes of cargo in 2015, a figure which will likely edge closer to its 1.5 million tonne capacity by 2020 when Tianfu commences operations. Chongqing meanwhile, is scheduled to open a new terminal in 2017.