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China connections
Roberto Gilardoni, commercial director of Italy- basedMD-11 freighter operator Cargoitalia, believes that the amount of excess capacity available out of China could put a strain on air freight yields
“
In general, Cargoitalia has had a very good experiencesincestartingits90-tonnepayload
MD-11 freighter services intoChina. With three MD-11Fs in the fleet, Cargoitalia is currently
servingHongKongthree times aweek andwe arenowflying intoandoutof ShanghaiPudongInternational airport.
The Shanghai service started in October flying twice weeklyfromourhubatMilan-MalpensaInternationalair- port in northern Italy,which iswell positioned to serve thecountry’smainindustrial commercial centres. Aseries of ad hoc flights carried out during Julywere used
as a ‘soft launch’ to test all elements of the new operation, which introduced our latest aircraft embodying several de- sign differences, including increased payload and forward cargodoor.
The attitude towards customer service, quality and proactiveness is remarkable in both Hong Kong and Shanghai. And, despite being tough andwell-prepared negotiators, the Chinese conduct business discussions calmly andpolitely. There are still some complications in the market due
to bureaucracy in mainland China, as it’s a less mature market than for example Japan and Hong Kong, but having said that I must point out that the situation is improving all the time.
We expect the current imbalance in trade to decrease gradually in the next few years: partly because of the possible relocation of some manufacturing away from China, and also due to increasing consumer demand throughout Asia, particularly in China as the market’s appetite forWesterngoodsgrows. But the steady growth of the Far Eastern carriers, and the
30 AIR LOGISTICSCHINA
ever-increasing proportion of main-deck space from Hong Kong and Shanghai, are both a concern for the future.
Excess capacitycertainlyaffectedthelastquarterof2010 and the process of consolidation and the reorganisation that is going on among the Chinese carriers will surely pushthemtogainmarket share. This couldputastressontheair freightyieldsandevenstart a rateswarwith some carriers.
The increase in labour costs in China, possible higher inflationinfuture, andtoomuchstrengthinthe currency is going to make it more difficult for companies to effectivelyproduce inChina. So we may see some manufacturers relocate to other
countries, and a slow-down in production due to labour shortages and increased costs.
This couldmakemanaging transportation and logistics costs difficult,with a possible impact on volumes for air cargo,andashift toothermodes forgoodsof lowervalue or urgency. Sea–airmaybecome amore viable option, as well as long-distance rail connections. Nevertheless, China will remain an importantmarket for
Cargoitalia andwe are there for the long term. Although the market conditions are beyond our control, we have already seen the positive impact of providing a high-quality service – and we are optimistic that our business to and fromthis regionwill continue to grow.
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