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Chinese couriers aim to fly solo

By control on November 28, 2012

Reports in the Chinese media suggest that airlines may be preparing to set up their own shipping and freight forwarding operations as early as next year to counteract their slowing cargo growth. Guangzhou-based China Southern and Shanghai-based China Eastern are both claimed to be mulling this radical new strategy, but would have to take into account the potential loss of business from third-party customers.

China's domestic airlines carried 5.58 million tonnes of cargo in 2011, 1-percent lower than in the previous year, according to the Civil Aviation Administration of China. In an indication of further market contraction this year, CAAC said volumes of cargo and mail handled by Chinese airports in the first quarter were down by 1.4 percent, year-over-year.

Courier firms have threatened to retaliate if carriers muscle in on their market by acquiring their own aircraft. YTO Express of Shanghai said it had filed an application with the CAAC to operate its own airline, while another Shanghai parcel company, STO Express, has said it wants to lease or purchase up to eight aircraft next year to exploit the fast-expanding market.

Yet four courier companies – including YTO – have incurred the wrath of the Chinese authorities for alleged unsafe practices. A small fire broke out in the cargo hold of a China Southern passenger aircraft in October after it landed in Dalian. Inflammable materials, including lithium batteries that YTO had wrongly classified, were blamed for the incident, which caused no injury or serious damage.

The China Air Transport Association, or CATA, this week announced it was temporarily banning member airlines from carrying shipments from YTO, Yunda Express, Huixing and Qihang until the companies tightened their procedures. YTO was penalized over the lithium batteries, and the other companies are understood to have shipped another prohibited item: vesuvian matches.

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