1.Air Cargo Development Overview

Global Air Cargo Market Environment 

Since the outbreak of the pandemic, the imbalance between supply and demand has led to volatile fluctuations in international air freight rates.

In the early stages of the pandemic, due to the suspension and cessation of a large number of flights, the shortage of capacity resulted in a mismatch between supply and demand in air cargo transportation, leading to a substantial increase in freight rates. Throughout 2021, freight rates remained high. At the beginning of 2022, as capacity gradually recovered, market rates began to decline, reaching a trough in mid-2023. In the latter half of 2023, accompanied by a significant increase in cross-border e-commerce volumes,

market prices rebounded rapidly, and by Q4 2023, freight rates almost reached the peak levels seen during thepandemic.

According to data from the IATA on global air cargo traffic and capacity changes, there has been a V-shaped reversal in global air cargo traffic volume from 2022 to January 2024. From the beginning of 2022 to the end of the year, global air cargo traffic volume continued to decline. However, from January 2023 onwards, there has been a continuous upward trend in global air cargo traffic volume.

In terms of capacity, the global air cargo capacity experienced a sharp decline in the first half of 2020 due to the impact of the pandemic. However, starting from the middle of 2020, capacity has been continuously recovering and has now returned to historical high levels. In terms of capacity structure, the number of freighters (dedicated cargo aircraft) has remained relatively stable. Unless aircraft manufacturers produce more freighters to enter the market, it is difficult for the global fleet of freighters to increase significantly. Currently, the growth in capacity in the market mainly comes from the belly space of passenger aircraft. During the pandemic, due to the shortage of capacity, some passenger aircraft were converted into cargo aircraft for operation.

From the latest data across various regions globally, it's evident that the Middle East and Asia-Pacific regions are experiencing the fastest growth in air freight volume. In January 2024, compared to December 2023, the total air freight transit volume in the Middle East increased by 25.9%, while the Asia-Pacific region saw a growth of 23%.

The situation of the air cargo market in China cannot be separated from the overall economic development.

Since the outbreak of the pandemic, China's economic growth has outperformed other regions globally, maintaining a growth rate of around 5% from 2019 to 2023. Compared to 2022, in 2023, the air cargo market capacity in China increased by 27%, primarily driven by a 31% increase in belly cargo capacity of passenger aircraft, with no significant change in the number of freighters.

During the pandemic, Chinese export freight rates also experienced volatile fluctuations, generally aligning with international air cargo rates. Starting in 2022, rates began to decline, reached a trough in mid-2023, rebounded in Q3, and peaked again in Q4.

However, China's export situation fared much better than the global average. In 2023, Chinese export air cargo volume maintained growth of over double digits, while the rest of the world mostly experienced declines in the first three quarters, with only a slight growth seen in Q4.

Additionally, in 2022, among global air cargo revenue, China accounted for the highest proportion of air cargo sales, followed by the United States, Germany, and Japan.

The development of air cargo transportation in Shenzhen is closely related to the local economy.

 The Greater Bay Area is a core driver of the global economy. Among the four major bay areas, the Guangdong-Hong Kong-Macao Greater Bay Area maintains a leading position in terms of land area, population, and total GDP. As one of China's strategic development priorities, the Greater Bay Area enjoys unique geographical, policy, and industrial advantages. With the support of national policies, the Greater Bay Area is striving to surpass other major bay areas worldwide and become a leader in the global economy. 

Shenzhen, with its prominent position in the Greater Bay Area, demonstrated significant advantages in 2022. Shenzhen had the highest number of specialized, distinctive, and new "little giant" enterprises, listed companies, single-category champions in manufacturing, and Fortune Global 500 companies in the Greater Bay Area, with 442, 405, 67, and 10 respectively, accounting for 51.3%, 48.6%, 50.8%, and 58.8% of the Greater Bay Area. Currently, Shenzhen is striving to build five centers: a global advanced manufacturing center, a financial center, a technology innovation center, a logistics center, and a consumption center, all of which have close relationships with air cargo logistics and play a supportive role in its development.

Industrial Output: In 2023, among the top ten cities with industrial revenue scale, Shenzhen led the nation with a total industrial output value of 4.85 trillion yuan. It maintained the "double first" in terms of industrial output value and industrial added value among all cities in the country, making it rightfully the largest industrial city in China.

 Import and Export Situation: Shenzhen's total export volume reached 2.45 trillion yuan in 2023, with a growth rate of 12.5%, leading the nation both in terms of total volume and growth rate. The export volume continued to grow rapidly in the first two months of this year, reaching 441.4 billion yuan, a year-on-year increase of 53.1%. Despite the high base of last year, Shenzhen still achieved rapid growth, gradually widening the gap with other cities.

High-tech Industries in Shenzhen: Supporting Shenzhen's rapid economic growth are seven strategic emerging industries and 20 industrial clusters, including next-generation electronic information industry, digital and fashion, high-end manufacturing equipment, green and low-carbon, new materials, biomedicine and health, and marine industry. These industries provide abundant sources of goods for air cargo transportation at Shenzhen Airport. In particular, Shenzhen is home to a number of leading high-tech enterprises such as Huawei, DJI, ZTE, BYD, and Mindray, all of wich are global top enterprises, representing prideful national independent brands. The international expansion of these brands brings excellent development opportunities for air cargo logistics enterprises.

Advanced Manufacturing and High-tech Industries in Shenzhen account for over 60% of the total industrial scale, contributing many high-value aerospace products. Among them, there are over 20,000 high-tech enterprises, ranking among the top cities in China. In the top 20 distributors of electronic components in China, Shenzhen accounts for 17.

 Cross-border E-commerce: In the past five years, China's cross-border e-commerce has maintained a high-speed growth trend, with the market size reaching 1.68 trillion yuan in 2023. In terms of the distribution of cross-border e-commerce companies by province, most companies are located in Guangdong Province, with Shenzhen's cross-border e-commerce companies accounting for 43% nationwide. The number of enterprises exceeds 40,000, with over 200,000 employees. Moreover, among the top 100 influential cross-border e-commerce companies in China, 43 are from Shenzhen. Shenzhen has over 150,000 cross-border e-commerce sellers, with one-third of Amazon's China sellers coming from Shenzhen. 

From the national distribution map of major cross-border e-commerce service providers, Guangdong's cross-border e-commerce logistics enterprises also account for over 50% of the total. Currently, in terms of the distribution proportion of major export cross-border e-commerce enterprises nationwide, Guangdong ranks first, followed by Zhejiang, Shanghai, Beijing, and other regions.

In terms of cross-border e-commerce financing, Guangdong Province provides over 94% of funding for cross-border e-commerce enterprises. These factors are crucial for the rapid development of cross-border e-commerce in the Greater Bay Area.

Looking globally, cross-border e-commerce is maintaining a high-speed growth trend with an increasing penetration rate, which exceeded 20% in 2022. Regions such as the Middle East, Southeast Asia, and Latin America are experiencing rapid penetration rates and development speeds. In terms of the destination countries for China's cross-border e-commerce exports, the top three are the United States, the United Kingdom, and Germany, followed closely by Malaysia and Russia. Regarding imports, the main source countries are Japan, the United States, Australia, and Germany.

By the end of 2023, the number of cross-border e-commerce sellers in Shenzhen exceeded 150,000, accounting for about half of the Chinese sellers on platforms such as Alibaba International, AliExpress, and eBay. In 2023, Shenzhen's cross-border e-commerce import and export volume exceeded 326.53 billion yuan, a year-on-year increase of 75.2%, further solidifying its position as a national leader. In January and February 2024, the cross-border e-commerce import and export volume in Shenzhen's Qianhai exceeded 30 billion yuan, with a year-on-year growth of over 200%. Shenzhen Airport's air freight volume for cross-border e-commerce reached 39,000 tons, a year-on-year increase of 111.3%.

Currently, Shenzhen enterprises operate over 300 overseas warehouses globally, covering an area of over 3.8 million square meters, an increase of over 1 million square meters compared to 2022. Shenzhen's cross-border e-commerce companies have established over 94 independent brand websites, and five industrial parks have been selected as national-level e-commerce demonstration bases. Shenzhen's listed cross-border e-commerce enterprises have reached 10, ranking first in the country.

Shenzhen's cross-border e-commerce customs supervision sites and bonded areas have reached 11, providing strong support for the expansion of cross-border e-commerce and greatly facilitating the global buying and selling of cross-border e-commerce goods.

2.The development of air cargo transportation at Shenzhen Airport.

Located in the heart of the Greater Bay Area and serving as the hub of Asia, Shenzhen Airport covers most Asian cities within a 4-hour flight radius and is just 35 kilometers away from Hong Kong. With the construction and opening of projects such as the Shenzhen-Zhongshan Link, Shenzhen-Dongguan Intercity Rail, and Shenzhen-Maoming Railway, it will become a new core for efficient intermodal transportation and provide comprehensive services across the Bay Area. Five intercity railways are scheduled for construction in 2023 and are expected to be operational by 2026.

Capitalizing on regional market characteristics, Shenzhen Airport has established a development strategy of "One Center, Two Hubs" in air cargo logistics: to build a world-class cross-border express hub and two hubs designated by the Civil Aviation Administration of China as an international air cargo hub and by the National Development and Reform Commission as a national air cargo hub.

In terms of cargo throughput, from 1992 to 2023, Shenzhen Airport has maintained an average annual growth rate of 20% in cargo throughput, with only two years of slight decline, one during the 2008 financial crisis and the other during the strict nationwide pandemic control measures in 2022. In all other years, historical highs have been achieved.

In recent years, the international cargo volume at Shenzhen Airport has maintained high-speed growth. From 2015 to 2022, the compound annual growth rate of international and regional cargo volume was 17.1%. The proportion of international cargo volume to total cargo throughput increased from 25.4% in 2015 to 51.5% in 2022. In 2023, the export volume of cross-border e-commerce experienced a significant increase, with a growth rate exceeding 80%.

Regarding the growth of cargo throughput at the three major airports in the Greater Bay Area, compared to 2022, the national civil aviation cargo throughput decreased by 2.36% in 2023, still not recovering to the pre-pandemic level of 2019. However, Guangzhou Airport and Shenzhen Airport in the Greater Bay Area showed much better growth rates than the national average.

In comparison to 2019, the cargo volumes of Guangzhou Airport and Shenzhen Airport in 2023 were 2.031 million tons and 1.6 million tons, respectively, representing an increase of 5.67% and 24.7%. Shenzhen Airport's international cargo volume increased by 87.8% compared to 2019. In contrast, Hong Kong Airport's throughput decreased by about 10%. Therefore, in terms of market share among the three major airports in the Greater Bay Area, the shares of Shenzhen and Guangzhou are gradually expanding, while Hong Kong is decreasing

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Image Source: Shenzhen Airport Group

Among the airlines operating at Shenzhen Airport, there are a total of 26 airlines, including 17 international and regional airlines and 9 domestic airlines. There are 59 cargo destinations served by all-cargo aircraft, including 37 international and regional destinations. Top global express companies and large cargo airlines gather at Shenzhen Airport to seek common development.

3.Shenzhen Airport's initiatives for the development of air cargo transportation:

Shenzhen Airport's cargo infrastructure is mainly divided into three parts: the East Cargo Area, the South Cargo Area, and the planned North Cargo Area. The East Cargo Area primarily handles international express shipments, while the South Cargo Area focuses on domestic cargo. The planned North Cargo Area will serve as the future safeguarding zone for international general cargo. According to the airport's plan, the total safeguarding capacity of these three areas will reach 4.5 million tons. Due to the rapid growth in international cargo volume, the safeguarding capacity of Shenzhen Airport's international cargo station has almost reached saturation, leading to the construction of new international cargo stations.

To seize the opportunities presented by the development of cross-border e-commerce, Shenzhen Airport has expanded its international express cargo safeguarding facilities. The specialized express center known as Warehouse No. 7, customized for YunExpress and Cainiao, was put into use last year, expanding the safeguarding capacity for cross-border e-commerce by 160,000 tons. The DHL South China Air Hub has also been completed. The second international express center is expected to be completed in July this year and put into operation next year, with a safeguarding capacity of approximately 200,000 tons.

Shenzhen Airport offers various customs declaration modes for cross-border e-commerce, including general exports and direct purchases (9610), B2B direct exports (9710), export to overseas warehouses (9810), and online shopping bonded imports (1210). A large number of leading international cross-border e-commerce and logistics enterprises, including SHEIN, Pinduoduo, Cainiao, and YunExpress, are gathered at Shenzhen Airport. The proportion of cross-border e-commerce goods at Shenzhen Airport has rapidly increased. In 2020, the proportion of cross-border e-commerce goods accounted for only 4% of international cargo volume, but by January-February of this year, it had increased to 42.9%.

To enhance cargo consolidation capabilities, Shenzhen Airport has established numerous pre-positioned warehouses and cargo stations. Currently, there are over a dozen international cargo stations at Shenzhen Airport. Among them, pre-positioned cargo stations, pioneered by Shenzhen Airport nationwide, further simplify cargo collection and improve its convenience.

In terms of intelligent logistics system construction, in 2021, Shenzhen Airport collaborated with Huawei to launch the first comprehensive system for digital transformation of logistics among domestic airports, achieving unified coding for goods, one-stop logistics services, and online cargo tracking. Shenzhen Airport leads the country in information technology construction, being the first to pilot and implement initiatives such as the cargo unified coding promoted by the Civil Aviation Administration of China and ONE Record promoted by the International Air Transport Association (IATA).

To improve cargo safeguarding efficiency, Shenzhen Airport implemented the Customs Clearance Smooth Flow Plan starting from July 3, 2020, reducing customs inspection time by 95%, increasing overall turnover efficiency by 45%, and reducing cargo dwell time at the cargo terminal by 30%, greatly enhancing customer experience.

Special mention should be made of the transportation of cross-border e-commerce goods with batteries. According to statistics from the International Air Transport Association, 80% of cross-border e-commerce goods are transported by air, and 40% of cross-border e-commerce products are goods with batteries. Especially for cross-border e-commerce products manufactured in Shenzhen, which are mainly consumer electronics, the quantity of goods with batteries is substantial. Due to the diverse categories and large quantities of cross-border e-commerce goods, it is difficult to provide air transport identification reports like those for bulk general cargo, posing significant challenges for the transportation of goods with batteries in cross-border e-commerce, resulting in the need to "ship far and wide" through airports in Hong Kong, Japan, South Korea, and other places.

In response to this, in 2023, Shenzhen Airport conducted research and introduced the "Pilot Work Plan for Shenzhen Airport Cross-Border E-commerce Goods with Batteries and Weak Magnetic Products," using UN38.3 battery test reports to replace air transport identification reports. In 2024, further optimization resulted in the formulation of the "Shenzhen Airport Cross-Border E-commerce Goods Air Transport Safeguarding Plan," addressing the transportation challenges of goods with batteries in cross-border e-commerce at Shenzhen Airport.

Currently, Shenzhen Airport has completed system integration for the transportation of goods with batteries with platforms such as SHEIN and Pinduoduo, and is in the process of integration with leading cross-border e-commerce logistics enterprises such as Cainiao, YunExpress, and Best Logistics. In the future, Shenzhen Airport hopes to establish deeper cooperation with more e-commerce and logistics enterprises, promote the sustainable and healthy development of cross-border e-commerce logistics and air cargo transportation industries, and create a pioneering example of a national logistics hub with airport characteristics.