Managing the risks of China’s air cargo

Despite China’s rapid economic growth, the air cargo sector has proven a bumpy ride for many fi rms, and there’smore turbulence ahead. China’s economy has transformed radically in the past three decades: annual GDP growth has averaged 9% since reforms began in 1978, and in the past fi ve years alone, the value of China’s […]


Despite China’s rapid economic growth, the air cargo sector has proven a bumpy ride for many fi rms, and there’smore turbulence ahead.

China’s economy has transformed radically in the past three decades: annual GDP growth has averaged 9% since reforms began in 1978, and in the past fi ve years alone, the value of China’s exports has nearly quadrupled, reaching$1 trillion in 2006.

Chinese factories have progressed from supplying worldwide markets with parts and basic materials to producing sophisticated, high-tech goods that are natural candidates for shipment via air cargo. This economic boom has led to Chinese air cargo throughput growth of more than 11% per year over thepast decade.

Cargo demand to and from China is shaped mainly by a growing trade surplus with the U.S. and Europe, trade defi – cits with Asian neighbors (collectively China’s largest trading partner), and increasing domestic trade fl ows. Given increasing liberalisation, this rapidly expanding market appears to offer rich opportunities for foreign cargo carriers, but it also poses several strategic challenges:

China’s cargo sector is changing at an astonishing speed, owing to a confl uence of consolidation, market liberalisation, and foreign carrier entry. Aviation infrastructure has constrained capacity that lags demand.