YTO Express gets ‘ok’ to launch cargo carrier

The company plans to invest CNY5.5 billion (US$890 million) in its new cargo enterprise over the next 10 years.

Air China China Eastern Airlines China Post Hangzhou Xiaoshan International Airport SF Express YTO Express

Seeking to tap China’s 2015-estimated nine million tonne air freight market, YTO Express is the latest Chinese express provider to receive approval to launch a domestic cargo airline. The Hangzhou Xiaoshan International Airport-based carrier will initially operate either B737-300 or 737-400 freighters on domestic routes with plans to expand to 15 Boeing freighters in the next three years. 

The company plans to invest CNY5.5 billion (US$890 million) in its new cargo enterprise over the next 10 years. YTO has already established partnerships with China Southern, Air China and China Eastern under which it will use their warehouse facilities in order to expand services further across China. Although primarily a domestic player, YTO signed a preliminary cooperation agreement with South Korea’s CJ Korea Express to share delivery networks and jointly develop a system for delivery of online-traded merchandise. In addition, YTO Express will take advantage of the overseas delivery networks of CJ Korea Express in the United States, Southeast Asia, and China.

The largest domestic express player remains SF Express, which currently operates 15 freighters from its base in Shenzhen Bao’an International Airport. SF Express, which carried 600,000 tonnes of air freight in 2012, also leases 19 freighters and plans to buy another 11 aircraft by the end of 2015. SF Express expanded its Asian reach in 2013 with outbound services to Thailand and Vietnam and in 2014 added Australia. 

The second largest mainland player is China Post with 18 B737 freighters, most of which are leased. China Post’s airline network covers not only China but Japan, South Korea, and Taiwan, with Nanjing, Shanghai and Wuhan as hub centers.