As 2017 ends, memories of a weak air cargo market – the norm in 2015 and much of 2016 – continue to fade into the past. With an upbeat market demanding the speed of airfreight, more cargo than ever is making its way onto airplanes, and the Chinese market is no exception; in fact, it’s exceptional. It’s therefore a good time to be the largest operator of both freighters and passenger aircraft in China.
China Southern Cargo (CZ Cargo) sailed through the turbulent times of years past, and is prepared to ride “the momentum of the government’s ‘Belt and Road’ initiative and state-owned enterprise reform to drive CZ Cargo to continuously improve, and become the first choice for customers,” Zhao Fengsheng, senior vice president of China Southern Cargo, recently told Air Cargo World. Although no new freighters have been added recently, China Southern Cargo has fine-tuned its winter 2018 schedule to allow for full optimization. Compared to 2017, it has added two flights per week, bringing the total weekly freighter flights to 49. The opportunities Zhao has been able to exploit with this flexibility make him an executive to watch in 2018.
CZ Cargo has never seen itself as being confined to its Guangzhou headquarters; it has long maintained a dual-hub strategy centered on Shanghai and Guangzhou and will soon add Beijing as a third cargo hub in 2019. “We plan to deploy a large fleet into Beijing Daxing Airport, and build it as our new hub, with an objective to become the leading airline.” CZ Cargo is planning at least two handling facilities – one with a 400,000-tonne annual domestic capacity and a second to handle 200,000 annual tonnes, internationally.
On the global front, Zhao says that closer cooperation with its SkyTeam Cargo partners will also contribute to the carrier’s future growth. In October, CZ Cargo and Air France-KLM Cargo signed a Memorandum of Understanding to strengthen their cargo cooperation, which began in 2003, when the two carriers signed their first freighter agreement. By 2015, the two groups were interlining to 53 destinations.
“I believe we can work out much better results in 2018 and beyond, in terms of added value to customers,” Zhao said. “There is not a single airline in the world with a network covering every corner of the globe. However, we can achieve this through partnership and network connection.”
While freighters are one major component of CZ’s cargo strategy, Zhao says he’s also optimistic about the potential of the carrier’s domestic bellyspace. Between January and October 2017, total e-commerce and express volumes were up 30 percent, year-over-year, while revenues were up 27
percent. “We are trying our best to adapt our operations and services to meet the requirements of the express customers.” Zhao added. E-commerce is not, however, purely domestic. CZ Cargo expects cross-border trade to continue surging, and will adjust freighter flights accordingly – especially along the “New” Silk Road. “CZ freighters are now flying to Hanoi, Ho Chi Minh, Amsterdam, Frankfurt, and Stansted,” Zhao added. Despite the current strength of the market, CZ Cargo is not without challenges. Zhao is aware that China’s domestic express carriers are eager to launch new routes overseas, and that one day they will inevitably become formidable competitors. “Although we are now ahead of them, we need to prepare in advance on how we are going to react.”
At the end of Q3, ended Sept. 30, China Southern Cargo’s growth exceeded general market averages. Cargo and mail traffic rose 16 percent, y-o-y, in September, to 617 million revenue tonne kilometers, driven primarily by international traffic, which rose 25 percent to 455 million tonnes. Moving into 2018, China Southern expects the robust global economy to contribute to the profitability of CZ Cargo. “I wish to see 2018 as a milestone when China Southern Cargo entered a new era of development, with a quantitative leap in terms of efficient freighter fleet management, streamlined operations, cargo digitalization, bilateral cooperation and most importantly, stronger capability in generating profit.”