9 Things we learned during our trip to China – Part II

Yesterday in Part I of “9 Things we learned during our trip to China”, we offered a few insights on China’s domestic express and e-commerce markets. What follows is the second installment.

We start with reason for optimism.  5. Cross-border trade and e-commerce are expected to be the main drivers for air cargo demand, and will fuel demand for long-haul freighters. Both YTO Express Airlines and SF Airlines have already launched international flights, and both are planning long-haul trans-pacific flights in the near future. HNA Group cargo airline subsidiaries,  Tianjin Cargo Airlines, Suparna Airlines and Hong Kong Airlines Cargo are also all in various stages of adding or planning new widebody freighter flights. For more on Suparna, see Suparna Airlines’ growing widebody freighter fleet.

6. New Beijing Airport means third cargo hub for China Southern Cargo. Although China Southern Cargo has never confined its freighter operations to Guangzhou where the carrier is based, it has long been restrained from expanding its operations in Beijing, mostly due to airport congestion. This is set to change in 2019 when Beijing’s second airport opens for business. China Southern is expecting to gain access to a number of slots at Daxing Airport, and plans to deploy a large fleet and make Beijing its third cargo hub after Guangzhou and Shanghai. Two cargo handling facilities, one domestic and one international, are under construction and are slated to open with airport in 2019. The domestic terminal boasts an annual handling capacity of 400,000 tonnes, while the international terminal can process 200,000 tonnes.

Regarding its current freighter operations, in CZ Cargo’s most recent schedule update, it will operate 49 weekly freighter flights with its fleet of twelve 777Fs and two 747-400Fs. From Shanghai Pudong, CZ Cargo dispatches daily freighter flights to Los Angeles, and 8 flights per week to Chicago. From Guangzhou CZ Cargo flies to Europe and North America.

7. Large cargo drones are being developed for warehouse-to-warehouse and regional transport.  JD.com recently unveiled the design characteristics of a heavy-load fixed-wing drone it is developing. The gas-powered fixed-wing drones will be deployed on routes between cities and provinces, said Dapeng Li, Principal Scientist at JD-X, the in-house research lab which oversees drone development for JD. The e-commerce giant has been working with Northwestern Polytechnical University and local authorities in Shaanxi Province to develop, and eventually manufacture and test industrial drones with max payloads that surpass one-tonne.

Noting that drones face regulatory obstacles at both the provincial and national levels, Li said that government authorities have thus far been “supportive of drones and logistics innovation.”

Regulatory issues aside, JD’s fixed-wing drone operations are expected to utilize existing and purpose-built airport infrastructure.  One such partner, is the China West Airport Group, which owns and operates a series of airports in western and central China, and has agreed to make some of its airport infrastructure drone-ready.

8. drones are already making commercial deliveries in China. At 1:30 pm on Nov. 7, a village promoter in a rural village on the outskirts of Suqian in China’s Jiangsu Province phoned another villager to let him know his JD.com package had arrived. The order, placed just before midnight on the night before, was delivered via one of JD’s own-developed Y3 multi-rotor drones. With more than 50 drones already deployed across multiple launch zones in non-urban regions in China, JD.com customers residing in rural villages are rapidly gaining access to a world of retail options previously unavailable. Here is a video of the Y3 taking off:

9. 11.11 volumes continue to surge. Once an obscure “Day” pioneered by e-commerce giant Alibaba, and named for unmarried people in China (Singles Day), 11 November rapidly became the biggest shopping day in the world. Nowadays, it has become more of a shopping season, with e-commerce platforms and their merchants now collecting “11.11” orders even before the 11th, and waiting until the clock strikes 12:00 am to fire off the orders. For this reason, figures involving orders processed in the first x hours, should be thoughtfully considered. Regardless, retail sales on 11.11 continue to surge and impress.

Last year, online shoppers — still mostly in China, but increasingly elsewhere — enabled Alibaba platforms to rack-up US$18 billion in gross merchandise.  This year? Alibaba reported the number of orders across its platforms rose 23%, to 812 million, boosting GMV 39% higher than the same day in 2016, to $US 25.3 billion.

The number-two retailer in terms of GMV, (and number-one in terms of revenue) Beijing-based JD.com also fared well during the 11.11 season, with GMV across its platform up by more than 50%, to US$19.1 billion for the eleven-day period beginning on 1 November. This year’s sales included more than 20,000 tonnes of fresh products, including 2 million hairy crabs, and 500,000 Black Tiger shrimp. Between 12:00 am and 4:00 pm on 11.11, JD Logistics says it delivered some 6.38 million orders — similar to average daily volumes handled by FedEx Ground on a global basis in Q4.

What follows are additional JD.com statistics regarding the 11.11 holiday.

Looking for numbers 1-4? See Part I, which first appeared yesterday.