In the fourth quarter of 2023, international air freight experienced an explosive demand surge and soaring prices, with freight rates on European and American routes surpassing the levels seen during the pandemic. From the airlines’ perspective, they were profitable during the peak season in the last quarter of the previous year.
Based on the market conditions in that period, airlines generally had high expectations for this year and have adjusted contract prices for 2024 accordingly.
More than two-thirds of the international routes for all domestic cargo airlines are currently sourced from cross-border e-commerce parcels. Cross-border e-commerce parcels have become the mainstream cargo type for domestic airlines, with significant e-commerce platforms being the primary customers for all domestic cargo carriers.
China exports over 10,000 tons of cross-border e-commerce parcels daily, including shipments from SHEIN, TEMU, TikTok, AliExpress, eBay, Amazon, Walmart, independent platforms, and export consolidation. Approximately 80% of these parcels are bound for European and American destinations.
How Many Freighters Needed for Transportation?
How many long-haul freighters are needed to transport at least 10,000 tons of e-commerce parcels by air daily for export?
For example, Europe-America intercontinental routes require long-haul wide-body freighters like B747 or B777 for operation.
Currently, there are approximately 60 long-haul wide-body freighters in China, including those operated by China Eastern Airlines, Air China, China Southern Airlines, SF Airlines, Zhongyuan Longhao, Zhongzhou Airlines, Postal Airlines, SF Airlines, Hongyuan, etc.
Globally, as of December 2023, there are around 752 long-haul wide-body freighters, including those operated by DHL, UPS, FedEx, Atlas, Cargolux, and others.
On a Europe-America intercontinental cargo route operating six flights per week, each route requires two long-haul wide-body freighters such as B747 or B777 for operation. Calculating based on each freighter loading 100 tons of cargo, transporting at least 10,000 tons of export cross-border e-commerce parcels would require over 200 long-haul wide-body freighters daily.
With approximately 752 long-haul wide-body freighters globally, the air transport demand for China’s cross-border e-commerce export parcels alone requires over 200 long-haul wide-body freighters, accounting for roughly one-third of the global capacity that needs to be allocated to the Chinese market.
What about the Belly Capacity of Passenger Aircraft
From the current situation in China, the recovery of belly capacity on passenger aircraft is different than expected. The number of foreign passengers coming to China has yet to return to normal fully, and many overseas countries still need to lift visa controls completely. The recovery level of international passenger routes is approximately 30% of pre-pandemic levels, making it difficult for the belly capacity of international flights to increase significantly in the short term.
Additionally, it may use intermodal transportation by first transporting goods to neighbouring countries of China (such as Singapore, Malaysia, South Korea, etc.) using narrow-body cargo planes or the belly capacity of passenger aircraft and then connecting to passenger aircraft bellies flying to Europe and America or utilizing SPA intermodal transportation. While this logic is theoretically feasible, such intermodal transportation and connecting solutions might need help to meet the time efficiency requirements of segmented procurement by e-commerce platforms.
E-commerce platforms set annual growth targets, and the future volume is expected to increase. Currently, the increase in cargo aircraft capacity needs to catch up with the pace of growth in e-commerce platform volume. Airlines must wait for order scheduling when purchasing aircraft, and the entire process from ordering to production and delivery of a cargo plane typically takes about two years.
Therefore, a significant increase in global cargo aircraft capacity supply may not be achieved in the short term.