China’s top air cargo carrier links with online booking platform
CHINA’S top air-cargo carrier will join an online booking platform that is revolutionising a US$200 billion global market the way websites like Travelocity and Expedia digitised flight transactions for passengers more than two decades ago.
Freightos Group, a software-as-a-service firm, announced on Tuesday (Dec 6) that the air-logistics arm of China Southern Airlines will offer real-time rates, capacity and bookings on WebCargo, its Barcelona-based unit that connects to more than 3,500 freight forwarders. More than 30 airlines, including Deutsche Lufthansa, American Airlines, Air France-KLM and Emirates SkyCargo, already list their services on WebCargo.
China Southern’s embrace of WebCargo – the first by a Chinese carrier – is a notable milestone for global supply chains needing smoother trade with the world’s second-largest economy. It will give shippers of goods online access to freight availability from China Southern, which accounts for about 5 per cent of all tonnage capacity worldwide.
Freightos said that this latest air-cargo partnership also raised the amount of globally-accessible capacity on WebCargo to 50 per cent. Four years ago, it was at zero. Airlines pay a fee for each booking.
The International Air Transport Association (Iata) estimated that air freight generated US$204.1 billion in revenue for commercial airlines in 2021, more than double the level in 2019. During the pandemic, air freight was one of the most volatile logistics links, given its reliance on passenger traffic for capacity.
When Covid-19 forced passenger carriers to ground planes, which carry cargo loads under their passenger cabins, a severe shortage of freight capacity resulted just as demand soared to move medical supplies and household essentials. That led to skyrocketing air freight rates, and many airlines were forced to turn their passenger seating areas into cargo holds – conversions that are now being reversed as leisure travel picks up again.
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Although transactions were moving to online platforms in 2018, the disruptions caused by the pandemic served as a catalyst for creating a bigger digital marketplace for air cargo.
Freightos chief executive Zvi Schreiber said: “This industry has been very late to the game – (some) 25 years after passenger air travel – but it really caught up in a quite amazing way with such rapid adoption. Covid, without a doubt, gave it an extra push.”
Chengqing Tao, executive vice-president of China Southern Air Logistics, said that the company plans to add more planes and digitise more capacity to “support the changing demands of the market”. China Southern currently operates a fleet of 14 Boeing 777 freighters and runs 60 flights a week from Chinese cities to Amsterdam, Chicago, London, Los Angeles and Frankfurt.
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“Digitisation has become a key business and practice enabler in the air cargo industry that will surely continue. We are now speeding up our pace to embrace digital transformation.”
Financial data from China Southern’s annual reports showed that in 2019, cargo made up about 6 per cent of the company’s revenue. But that share jumped to nearly 20 per cent last year. And in the first half of 2022, cargo accounted for almost 26 per cent of the Guangzhou-based carrier’s revenue.
However, the outlook for shipping on most modes of transportation is growing cloudier as the world economy decelerates.
The Iata said that global demand for air cargo dropped 13.6 per cent in October from a year ago, as volumes across all six major regions declined. New export orders, a bellwether for cargo demand, shrank everywhere except China and South Korea, the Iata added.
China Southern’s Tao said that the industry will need to be prepared for a downturn in 2023. “But I’m still cautiously positive on the growth outlook of the air cargo market between China and the world, since China will continue to play an integral role as the world’s manufacturing hub and is one of the largest consumer markets.” BLOOMBERG
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