Faced with changes, firm confidence in development

In 2023, there will be many adverse factors in the global economic development, such as the downward business cycle, trade recession, stagnation of globalization, Russia-Ukraine conflict, rising inflation, and Sino US game. The International Monetary Fund predicts that the global economic growth rate will only be 2.7% in 2023, and about one-third of the world's countries will experience economic contraction. The World Bank has warned that the global economy will experience its largest slowdown in over 80 years.

In 2023, the Chinese economy is facing triple pressures of demand contraction, supply shock, and weakening expectations. In the high-end manufacturing sector, key core technologies and materials are stuck, and there is a risk of transfer in the low-end manufacturing industry. At the same time, the supply chain has security risks and faces the risk of being "precisely decoupled" by developed countries.

The high demand, high freight rates, and high cargo volume in the Chinese international air cargo market due to the pandemic have directly led to the rapid growth of orders for ocean going vessels and all cargo aircraft. According to orders during the epidemic, the average annual increase in sea freight capacity from 2022 to 2025 is 10%. The delivery plan for original wide body cargo aircraft is to increase by more than 100 units compared to before the epidemic, and will be concentrated in delivery from 2023 to 2024. Starting from 2023, with the continuous delivery of ships and cargo planes and the rapid recovery of international passenger aircraft belly cabins, there is a high possibility of excess cargo capacity.

The pressure faced by the economy and changes in market supply and demand will directly lead to changes in the air freight situation. According to the prediction of the International Air Transport Association, the global air cargo and mail transport volume in 2023 will decline by 4.3% year-on-year to 57.7 million tons, and the freight revenue of airlines will be about 149.4 billion dollars, down 25% year-on-year.

After the continuous optimization of epidemic prevention and control policies, the advantages of strong resilience, great potential, and abundant vitality of China's economy will resume to emerge in 2023, and the economy is expected to rebound overall.

Domestically, the per capita GDP has exceeded 10000 US dollars. With the recovery and growth of the economy, the improvement of employment situation, and the increase of residents' income, the trend of expanding consumption scale and upgrading consumption structure in China will not change. In April 2022, the Central Committee of the Communist Party of China and the State Council issued the "Opinions on Accelerating the Construction of a National Unified Market". Leveraging the advantages of the domestic market, promoting economic internal circulation, and enhancing the endogenous driving force of economic growth will become the main aspect of China's economic growth in 2023. In 2023, the domestic air cargo market will stabilize and rebound. On the one hand, the demand for cargo transportation will increase, and on the other hand, a large number of domestic aircraft will recover, leading to a significant increase in the cargo volume in the belly of the aircraft.

Internationally, due to China's independent and complete industrial system, large supply chain scale, and complete industrial support, China's position as a "world factory" will not change in the short term. With the transformation and upgrading of traditional industries and the cultivation and growth of strategic emerging industries, Chinese manufacturing and Chinese brands will accelerate their development pace in global competition. The game between China and the United States will continue in 2023. On the basis of seeking competition and cooperation with Europe and America, China will further increase its economic cooperation with countries such as ASEAN, South Asia, the Middle East, Latin America, and Africa. This will also expand the supply market and communication channels for air cargo.

The important role of air freight in ensuring smooth transportation, maintaining the stability of the supply chain industry chain, and promoting regional economic development during the epidemic has been fully reflected. The development of air freight has begun to receive attention from multiple parties, and various supportive policies have been introduced one after another, tilting various aviation resources towards cargo. After the epidemic, air freight will continue to receive attention, and the shortcomings in terms of cargo rights, ground support, planning and layout will gradually be compensated. The transition from 'valuing customers over goods' to' valuing both customers and goods' will not be achieved overnight, but we believe it will remain steadfast.

In 2023, Chinese air freight forwarders should have firm confidence in development, understand the times and trends, grasp the dangers and opportunities, and seek certainty in the uncertain environment of development.

Strengthen internal skills and enhance competitiveness

After experiencing three years of turbulence in the air freight market due to the pandemic, more and more freight companies are starting to consider their development positioning, clarify their development priorities, adjust market strategies, and enhance their ability to resist risks based on the nature of the enterprise.

In 2023, freight airlines will further clarify their development goals, explore niche markets, launch differentiated freight products, meet the needs of different customers, improve customer satisfaction, and fully improve the utilization rate of all cargo aircraft by adopting various methods such as independent sales, cooperative charter flights, or leasing capacity. In 2023, SF Express, JD Logistics, and Cainiao Network Express, which have fully expanded their logistics footprint, will further expand their exploration in the field of air freight; After the mixed reform, the three major aviation logistics sectors will gather in A-shares, and according to different market strategies, it is believed that they will gradually step out of a differentiated development path. In 2023, freight airlines that are clearly positioned as freight carriers will further focus on their main business, be meticulous and refined, and fully demonstrate their professionalism in providing full cargo aircraft capacity services.

With the operation of Ezhou Huahu Airport in 2022, professional freight hubs will gradually develop and grow. In 2023, the SF Huahu Transfer Center will be put into operation, and SF Air's cargo aircraft will continue to grow. In order to create a hub and spoke network structure centered around Huahu Airport and with Shenzhen, Beijing, Hangzhou, and Chengdu as regional hubs, SF Express Group is bound to gradually adjust the operational pattern of domestic freight routes. The comprehensive cargo hub in 2023 will not only be pleased with the rapid recovery of passenger aircraft belly cabin routes and cargo volume, but also experience the impact of a decline in cargo volume for all cargo planes. The competition for cargo flights will gradually evolve from seizing transportation capacity to seizing cargo sources, after all, only with cargo sources can we ultimately retain transportation capacity. To seize the lead in fierce market competition, freight hub airports also need to work hard to improve their cargo support capabilities and service levels, and also have the courage and spirit to take the initiative and dare to innovate.

As a key link in the air freight chain, freight forwarding will face greater challenges in 2023 than airlines and airports. The development of Chinese brands and the improvement of the competitiveness of shipping enterprises will drive the strength of associated freight forwarders, but at the same time, with a large number of enterprises evolving into integrated logistics service providers, the Lebensraum of freight forwarders will be squeezed. After experiencing the good times of lying down and making money in the past few years, most freight forwarders in 2023 will adopt a contraction strategy, focus on their main business, enrich their channel models, strengthen and refine their products, improve their service capabilities, and strive to survive the potential waves and sands.

In 2023, airlines, hub airports, and freight forwarders will pay more attention to the full utilization of passenger aircraft belly cabin capacity in addition to emphasizing cargo flights. The instability of passenger aircraft belly compartments during the epidemic has led to frequent cargo pulling. The weight of cargo carried by the belly cabin of passenger aircraft accounts for about 70% of China's air cargo and mail transportation volume, and the high proportion further proves the importance of belly cabin capacity. The carrying capacity of the belly cabin of a passenger plane is related to multiple factors such as the airline's aircraft type, number of passengers, number of luggage, cargo cut-off time, airport's loading capacity, number of installed passengers, and loading capacity, the type and packaging of goods delivered by freight forwarders, and the degree of cooperation between airlines, airports, and freight forwarders. With the increasing emphasis on freight business, multi-party cooperation to enhance the carrying capacity of belly tanks will also become an important task in 2023.

Given the uncertain nature of air cargo, market entities in the air cargo market also need to estimate risks and enhance their ability to resist risks. The recovery of freight demand brought about by the optimization of epidemic prevention and control policies will take some time to manifest, and how to deal with the risks of the transition period needs to be planned in advance. In 2022, amidst the volatility in the freight market, Yuantong Airlines decisively sold all B737F cargo planes, stabilizing its fleet in the B757F and B767F medium and long range cargo aircraft models. This is a typical measure to predict the market and improve its risk resistance.

Strengthen innovation and accelerate the pace of development

The long-term trend of "heavy passenger and light cargo" has led to slow development of air freight. Whether it is the types of goods transported, the requirements and modes of security checks, breakthroughs in security functions, or the level of informatization, the pace of development needs to be accelerated.

The traditional types of air transportation goods are mainly high-end manufactured goods and consumer goods such as electronic products and accessories, high-end automotive parts, pharmaceutical products, medical equipment, luxury goods, etc. However, with the changes in demand, e-commerce and cross-border e-commerce have become important ways of trade exchanges. The International Air Transport Association predicts that by 2025, the global e-commerce retail sales will reach 7.4 trillion US dollars. According to statistics, it is expected that the goods sold by e-commerce platforms will account for approximately 22% of China's air cargo volume in 2022.

The variety of e-commerce goods, small size, and multiple batches, with a large number of goods containing lithium batteries, have put forward higher requirements for the innovative development of air freight. In 2023, while ensuring the smooth passage of cross-border e-commerce customs clearance models, it is necessary to enhance the comprehensive capabilities of cross-border e-commerce goods in terms of security inspection, collection, assembly, and installation. This requires the joint efforts of local governments, airlines, ground support units, and freight forwarders.

The innovative measures of cargo and mail security inspection, such as security inspection in advance, super large security inspection instrument, differentiated security inspection, hierarchical management of freight forwarder, will continue to be deeply promoted in 2023. At the same time, different security inspection issues that plague freight stations, such as unifying security inspection standards, improving security inspection capabilities, reducing unpacking rates, and reducing the number of identification reports, will also be addressed to varying degrees based on the promotion efforts. Increasing the promotion efforts of industry regulatory authorities will further improve the speed of innovation and development.

In recent years, various innovative development models for air cargo, such as long-distance freight stations, overseas freight stations, port area linkage, air to air transfer, and multimodal transportation, have been accelerating and will continue to deepen in the future. The innovation and expansion of the security side is based on the demand side of the increase in flight routes and cargo volume, while also creating advantages for the increase in demand side. Due to the different development situations of freight transportation at different airports, learning from innovative models also needs to be combined with one's own reality. To pursue development and innovation, we must be pragmatic and not be impulsive, let alone eager for success.

The backward level of information technology in air freight has become an important factor restricting development. From artificial to information technology, from information technology to intelligence, from one link in the chain to multiple links, and then covering the entire chain, there is a long way to go for the development of information and intelligence in air cargo. In recent years, aviation associations, airports, airlines, freight forwarders, and others have promoted and explored the informatization and intelligence of freight development from different perspectives, achieving significant improvements in the use of electronic waybills, tracking and querying of goods, and sharing of information. However, the repeated construction of similar information platforms not only causes resource waste, but also affects the efficiency of promotion to some extent. Based on the relatively mature freight information system with a large business volume and extensive involvement in various aspects within the industry, further optimization and improvement, expansion of service scope, and further expansion are also a new approach.