Air Freight News

China’s top air cargo carrier links with Freightos as bookings jump online

China’s top air-cargo carrier is joining an online booking platform that’s revolutionizing a $200 billion global market the way websites like Travelocity and Expedia digitized flight transactions for passengers more than two decades ago.

Freightos Group announced Tuesday that the air-logistics arm of China Southern Airlines Co. will offer real-time rates, capacity and bookings on WebCargo, a Barcelona-based unit of Freightos that currently connects to more than 3,500 freight forwarders. More than 30 airlines including Deutsche Lufthansa AG, American Airlines Group Inc., Air France-KLM and Emirates SkyCargo already list their services on WebCargo.

China Southern’s embrace of WebCargo -- the first by a Chinese carrier -- is a notable milestone for global supply chains needing smoother trade with the world’s No. 2 economy. It will give shippers of goods online access to freight availability from China Southern, which accounts for about 5% of all tonnage capacity worldwide.

According to Freightos, its latest air-cargo partnership also brings the amount of capacity accessible globally on WebCargo to 50%, up from zero four years ago. Airlines pay a fee for each booking.

Air freight generated an estimated $204.1 billion in revenue for commercial airlines in 2021, more than double the level in 2019, according to industry group IATA, During the pandemic, it’s been one of the most volatile logistics links given its reliance on passenger traffic for capacity.

When Covid-19 forced passenger carriers to ground planes, which carry cargo loads under their passenger cabins, a severe shortage of freight capacity resulted just as demand soared to move medical supplies and household essentials. That led to skyrocketing rates and forced many airlines to turn passenger seating areas into cargo holds -- conversions that are now being reversed as leisure travel picks up.

Though transactions were moving to online platforms back in 2018, the pandemic’s disruptions served as a catalyst for creating a bigger digital marketplace for air cargo.

‘Late to the Game’

“This industry has been very late to the game -- 25 years after passenger air travel, for example -- but it really caught up in a quite amazing way with such rapid adoption,” Freightos CEO Zvi Schreiber said in an interview. “Covid, without a doubt, gave it an extra push.”

China Southern operates a fleet of 14 Boeing Co. 777 freighters and runs 60 flights a week from Chinese cities to Amsterdam, Chicago, London, Los Angeles and Frankfurt. The company plans to add more planes and digitize more capacity to “support the changing demands of the market,” according to Chengqing Tao, the executive vice president of China Southern Air Logistics.

“Digitization has become a key business and practice enabler in air cargo industry that will surely continue,” Tao said in an email response to questions. “We are now speeding up our pace to embrace digital transformation.”

In 2019, cargo contributed about 6% of China Southern’s revenue, but that share jumped to almost 20% last year, financial data from China Southern’s annual reports for those years show. Through the first half of 2022, cargo accounted for nearly 26% of the Guangzhou-based carrier’s revenue.

But the outlook for shipping on most modes of transportation is growing cloudier as the world economy decelerates.

According to the International Air Transport Association, global demand for air cargo dropped 13.6% in October from a year earlier as volumes across all six major regions declined. New export orders, a bellwether for cargo demand, shrank everywhere except China and South Korea, IATA said.

“Our industry will need to be prepared for a downturn in 2023,” Tao said. “But I’m still cautiously positive on the growth outlook of the air cargo market between China and the world, since China will continue to play an integral role as the world’s manufacturing hub and one of the largest consumer markets.”

Bloomberg
Bloomberg

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© Bloomberg
The author’s opinion are not necessarily the opinions of the American Journal of Transportation (AJOT).

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