Page 374 - 2021 White Paper
P. 374
1 White Paper on the Business Environment in China
costs and enhance the efficiency of the logistics Air freight rates out of China were at their
industry amid manufacturing transformation highest levels ever in April as massive global
and upgrades, so as to promote the synergy demand for personal protective equipment
between the two industries. By 2025, the logistics (PPE) from countries battling the coronavirus
industry will play a more significant role in cost disease 2019 (COVID-19) continues unabated.
reduction and improvement of efficiency in the The demand was so strong from Europe and
real economy, supply chain coordination and the US that Chinese factories manufacturing
high-quality development of the manufacturing vital medical equipment remained open through
industry (ATimesCN). the May 1-5 Labor Day holidays. On top of the
sustained heavy demand for PPE, available cargo
Air Freight space was drastically reduced with the continued
suspension of passenger flights on both the
The coronavirus epidemic everely limited China-Europe and trans-Pacific trades, leading to
air cargo capacity into and out of China in the a market environment Freight Investor Services
first quarter of 2020. The backlog of freight at (FIS) has described as “mayhem.” The emergency
the airports then took some time to clear. The supplies were driving the market in April 2020,
total international widebody passenger aircraft and particularly from South China, were at their
utilization of Chinese carriers was down nearly highest-ever levels (Knowler).
50% from the same time in 2020, while intra-
Asia widebody belly capacity has reduced by Shippers dealt with the sticker shock by either
54%. Air cargo capacity of auto parts alone into canceling shipments, absorbing it in their margins
China was 40% of what it was in 2019, equal to or passing it along to their customers. Passenger
nearly 83,000 ton decrease, while capacity out airlines slashed capacity since there was little
of mainland China is down around 70%. Priority interest in consumer travel. Delta Air Lines
for any available air shipments was going to temporarily parked more than 700 aircraft across
medicine and other critical shipments, meaning its system, which includes every aircraft type it
that very little nonessential freight was moving operates. The demand for cargo had been one of
and rates were being pushed up extravagantly. the few bright spots for passenger airlines. The
Certain logistics providers were also rumored to rates began to fall once demand for shipping PPE
be pushing payment terms for freight contractors dropped. Consumer demand was also down by
to 60 days, while freight forwarders are trying to June 2020 as economies across the world struggle
charge customers as much as possible to survive. amid continued lockdowns and job losses. Freight
In the longer term supply chains became you flights by passenger airlines, dubbed "preighter"
distressed supply chains as production tried to flights, became less frequent throughout the
catch up (Williams). summer, though, as the cost of fuel rose and
made the trips less profitable for airlines. Capacity
Air freight rates continued to skyrocket after remained an issue even as freighters were flying
the grounding of many passenger flights in Asia, more hours. Converted passenger jets contributed
leaving shippers scrambling to book limited spots to easing some of the capacity crunch during the
on cargo planes. About half of the air cargo carried peak of the crisis (Leonard).
worldwide normally flies in the belly of passenger
jets rather than in dedicated freighters. But deep Meanwhile, China took further steps to boost
flight cuts in response to the coronavirus outbreak the country's international air freight capacity to
made the market more dependent on freight stabilize supply chains. Premier Li Keqiang stressed
haulers. The price at least three times higher that development of an international logistics and
because there is just no capacity. Cargo pricing delivery services system must be accelerated to
on China-to-US routes had reached abnormal uphold the smooth running of the industrial chain.
highs. In mainland China, the number of freighter In the course of the outbreak response, the weak
arrivals finally increased by March as factories links in the industry’s air transport capacity have
resumed production (Baertlein and Kirton). been exposed. "We must plan ahead and harness
the initiative of logistics firms in developing an
374
costs and enhance the efficiency of the logistics Air freight rates out of China were at their
industry amid manufacturing transformation highest levels ever in April as massive global
and upgrades, so as to promote the synergy demand for personal protective equipment
between the two industries. By 2025, the logistics (PPE) from countries battling the coronavirus
industry will play a more significant role in cost disease 2019 (COVID-19) continues unabated.
reduction and improvement of efficiency in the The demand was so strong from Europe and
real economy, supply chain coordination and the US that Chinese factories manufacturing
high-quality development of the manufacturing vital medical equipment remained open through
industry (ATimesCN). the May 1-5 Labor Day holidays. On top of the
sustained heavy demand for PPE, available cargo
Air Freight space was drastically reduced with the continued
suspension of passenger flights on both the
The coronavirus epidemic everely limited China-Europe and trans-Pacific trades, leading to
air cargo capacity into and out of China in the a market environment Freight Investor Services
first quarter of 2020. The backlog of freight at (FIS) has described as “mayhem.” The emergency
the airports then took some time to clear. The supplies were driving the market in April 2020,
total international widebody passenger aircraft and particularly from South China, were at their
utilization of Chinese carriers was down nearly highest-ever levels (Knowler).
50% from the same time in 2020, while intra-
Asia widebody belly capacity has reduced by Shippers dealt with the sticker shock by either
54%. Air cargo capacity of auto parts alone into canceling shipments, absorbing it in their margins
China was 40% of what it was in 2019, equal to or passing it along to their customers. Passenger
nearly 83,000 ton decrease, while capacity out airlines slashed capacity since there was little
of mainland China is down around 70%. Priority interest in consumer travel. Delta Air Lines
for any available air shipments was going to temporarily parked more than 700 aircraft across
medicine and other critical shipments, meaning its system, which includes every aircraft type it
that very little nonessential freight was moving operates. The demand for cargo had been one of
and rates were being pushed up extravagantly. the few bright spots for passenger airlines. The
Certain logistics providers were also rumored to rates began to fall once demand for shipping PPE
be pushing payment terms for freight contractors dropped. Consumer demand was also down by
to 60 days, while freight forwarders are trying to June 2020 as economies across the world struggle
charge customers as much as possible to survive. amid continued lockdowns and job losses. Freight
In the longer term supply chains became you flights by passenger airlines, dubbed "preighter"
distressed supply chains as production tried to flights, became less frequent throughout the
catch up (Williams). summer, though, as the cost of fuel rose and
made the trips less profitable for airlines. Capacity
Air freight rates continued to skyrocket after remained an issue even as freighters were flying
the grounding of many passenger flights in Asia, more hours. Converted passenger jets contributed
leaving shippers scrambling to book limited spots to easing some of the capacity crunch during the
on cargo planes. About half of the air cargo carried peak of the crisis (Leonard).
worldwide normally flies in the belly of passenger
jets rather than in dedicated freighters. But deep Meanwhile, China took further steps to boost
flight cuts in response to the coronavirus outbreak the country's international air freight capacity to
made the market more dependent on freight stabilize supply chains. Premier Li Keqiang stressed
haulers. The price at least three times higher that development of an international logistics and
because there is just no capacity. Cargo pricing delivery services system must be accelerated to
on China-to-US routes had reached abnormal uphold the smooth running of the industrial chain.
highs. In mainland China, the number of freighter In the course of the outbreak response, the weak
arrivals finally increased by March as factories links in the industry’s air transport capacity have
resumed production (Baertlein and Kirton). been exposed. "We must plan ahead and harness
the initiative of logistics firms in developing an
374
