China’s B2B express volume to grow dramatically

SHANGHAI – The freighter fleets of China’s express companies are growing rapidly as an increasing proportion of retail spending moves online—but that’s only half the reason express companies are adding airfreight capacity as quickly as possible. Yesterday at Cargo Facts Asia 2017 in Shanghai, Peter Huang, director of corporate planning at SF Airlines, said that the market for business-to-business (B2B) express and overnight delivery services was a second driving force. He added B2B demand for express delivery was only beginning to develop, and would offer significant growth potential in the years to come.

SF believes that China’s current overnight express market is only half of what it could be. But Huang said that part of the reason the B2B overnight express market is still in its infancy in China, is that air freight networks have not yet reached their full maturity. For B2B volume to reach its potential, more air freight capacity is needed. On the demand side, commercial competition and the need to deliver efficiency through transparency, security and speed is also elevating B2B shipment requirements.

Looking at SF’s current fleet and network, the carrier’s 39 freighters largely operate in a domestic flight network that is heavily concentrated along the coastal cities of eastern China, with far fewer points served in the west. However, once the company’s new global air freight hub in Ezhou is operational, additional domestic and international flight frequencies can be expected.

On the domestic side, the location of the hub near Wuhan, the capital of Hubei province in Central China, will allow SF to serve the expected increase in B2B express demand in the rising cities in Central and Western China. Economic prosperity has long been stratified and uneven throughout China, with most of the country’s economically prosperous cities located on the east coast. But recent government policies embedded within China’s twelfth five-year-plan and in the “One Belt, One Road” initiative seek to change this, largely through investment. A byproduct of a richer and better-integrated interior, Huang says, will be increased interregional trade between cities in eastern China and their counterparts in the west and center of the country. And with this increased trade will come increased demand for overnight express delivery.