Shanghai Pudong International Airport Cargo Terminal Ltd. (PACTL) continues to capture market share. In the first four months of this year it handled almost half the freight flooding through mainland China’s busiest air cargo hub.
The terminal saw its share of the airport’s air cargo rise from 44.3 percent last year to 47.4 percent in the January to April period, despite competition from local carrier China Eastern and its China Cargo Airlines unit, and from the busy UPS hub. May’s record throughput of 122,000 tons is expected to continue the trend of the terminal handling record cargo volumes each month this year.
“We are expecting a good year,” said Lutz Grzegorz, vice president of PACTL, at the Transport Logistic fair in Shanghai. PACTL is a joint venture with three shareholders — Shanghai Airport (Group) with 51 percent, Lufthansa Cargo with 29 percent and JHJ Logistics Management Co. with 20 percent.
But competition from other fast-rising air cargo centers in China has PACTL looking over its shoulder and working out ways to improve its Shanghai service offering.
“We know Chengdu, Chongqing and Zhongzhou all want a piece of the cake, so we need to provide a more attractive service than the rest,” Grzegorz said. The central China cities are developing into electronics manufacturing centers and local governments offer attractive incentives to attract business and airlines.
PACTL’s management has realized building a perishables terminal is the way forward. Temperature-controlled shipments carry higher yields than traditional air cargo, and they constitute one of the industry’s fastest-growing sectors.
“The year-over-year growth of pharma and other such commodities is much greater than other cargo and PACTL decided it was time to invest in a facility. Some freighters come in with 18 units [ULD containers] of temperature-controlled cargo on a single flight. That is 36 tons alone and we need the capacity to handle that,” Grzegorz said.
The new 35,000-square-foot perishables terminal will be the first warehouse in China able to create an ambient temperature and will handle the standard perishables as well as pharmaceuticals and other high-value commodities. It has a design capacity of 47,000 tons a year and the design phase has been completed.
“We hope the terminal will last for several years. Cargo volumes are growing and airlines calling at Shanghai need it, as you can see from the record amount of cargo being handled every month this year, so the facility is an investment in the future,” Grzegorz said.
China’s overall air cargo volume grew 4.9 percent last year to about 12.58 million tons, with airports in Beijing, Shanghai and Guangzhou handling 51.8 percent of the total throughput. Shanghai Pudong International Airport maintained its number one position in cargo and mail transportation, handling almost 2.8 million tons, with PACTL’s share reaching 1.3 million tons.
International cargo, especially on the trans-Pacific routes, has remained strong in the post-Chinese New Year period, with May exports growing almost 16 percent.
The welcome growth cannot mask a difficult air cargo environment that has seen declining interest in freighters from carriers discouraged by the economics of operating flights on which the revenue cannot be supplemented by fare-paying passengers. New and fuel-efficient planes from Boeing and Airbus have airlines boosting their passenger fleets, injecting huge amounts of belly-cargo capacity into the market, while parking or disposing of unprofitable cargo aircraft.
But when Grzegorz was reviewing PACTL’s statistics recently, he noticed that 70 percent of all the cargo throughput at the terminal was being carried by freighters. The terminal handles around 440 all-cargo planes a week.
“There are a tremendous number of passenger planes flying into Shanghai from all over the world, and most people assume the freight would largely be carried in the bellies, but [it] isn’t the case,” he said.
“The Shanghai market and catchment area is very strong and is supporting the cargo carriers. I must admit that a couple of years ago, I was afraid of what the Go West plan [a Beijing initiative to encourage manufacturers to move production facilities inland] would mean to our business, but Shanghai has such a strong hold on the market that it cannot be taken off the map,” Grzegorz said.