The rate of change in China’s domestic express industry is increasing. It was only three years ago that none of the country’s express companies operated an aircraft, and when Shenzhen-based SF Express announced that it had acquired a 757 freighter I think most people’s reaction was: “SF Express? What’s that?”
SF now operates nine freighters and as CEO George Li Dongqi detailed at the Cargo Facts Asia event last April, the company expects its fleet to grow to over 60 freighters (owned and leased, and including widebodies) by 2015 and over 150 by 2021. Now, instead of asking “What is SF Express?” the question has become: “Who’s next?”
The answer is that at least two more of China’s express delivery companies are poised to acquire freighter fleets in the near future.
- Shanghai-based STO Express, which moves more than 20% of its packages by air, said it planned to acquire six-to-eight freighter aircraft in 2013. STO currently uses lift provided by the big Chinese combination carriers, but given its sizeable air capacity needs the company felt it made sense to acquire its own fleet. The company has not indicated what type of freighters, nor whether it will buy or lease. Nor has it decided on a location for its main hub.
- Another Shanghai-based express company, YTO Express, says it too plans to operate its own fleet, and has filed an application with the Civil Aviation Authority of China to launch a wholly-owned airline, based at Hangzhou’s Xiaoshan Airport. A YTO spokesperson said the company was currently leasing three 737-300Fs from all-cargo carrier Yangtze River Express, but with the domestic Chinese express market growing at “breakneck speed” it was imperative for YTO to expand.
These two companies, and likely others as well, appear to be modeling their expansion on SF Express, and we expect this to drive strong demand for narrowbody freighters.
If you are interested in the potential strength of the narrowbody conversion market next year, I encourage you to join in on the “10 Crucial Trends To Watch For in 2013” teleconference hosted by Cargo Facts’ parent company, Air Cargo Management Group. Click here for full details.