(Yicai) June 24 -- ZTO Express has joined other leading Chinese logistics providers in setting up its own air cargo unit so as to secure capacity advantages and compete in the rapidly expanding and increasingly complex global air shipments market.

Zhongtong Aviation was recently set up with a registered capital of CNY600 million (USD83 million) in Changsha, Hunan province, according to corporate information platform Tianyancha. 

Major Chinese logistics firms have created their own air cargo subsidiaries in recent years, with SF Express, China Post Group, JD Logistics, and YTO Express Group among them, as fewer international passenger flights since 2020 has cut cargo hold capacity, while strong demand for medical and pandemic-related supplies has driven up China’s air-freight rates. In this context, all-cargo airlines enjoy capacity and cost advantages.

“The rapid development of the domestic express delivery sector has prompted couriers to set up cargo units, building fleets of dedicated planes, to lessen their dependence on passenger airlines and capture cargo volumes,” a market development executive at one courier told Yicai.

SF Express has 90 cargo jets, a fleet far in excess of any Chinese passenger airline, squeezing the cargo businesses of traditional small and medium-sized carriers, the person pointed out.

The cargo arms of China's three major state-owned airlines outdid most passenger carriers by earnings last year. Net profit at Air China Cargo surged 69 percent to CNY1.9 billion (USD264.6 million), while that at China Southern Airlines Logistics soared 72 percent to CNY4.2 billion, and that at China Eastern Airlines Logistics rose 7.4 percent to CNY3.1 billion. Their parent companies lost money.

Air cargo transport grew more than 30 percent in the first quarter of this year from the same period of 2019, but the market faces geopolitical and tariff hurdles, according to industry insiders.

The US’ cancellation of the duty-free exemption for packages valued at USD800 or less from China and Hong Kong directly impacts cross-border logistics, experts from the China Air Transport Association pointed out, adding that it will also increase airline compliance costs and accelerate the supply chain's deep restructuring.

Editor: Martin Kadiev