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China: keeping a cool head
Ditlev Blicher, executive vice president of North Asia for global logistics services provider Ceva, believes that economic uncertainty is largely to blame for the current volatility of the China sector, especially its exports, and that carriers should be aware of taking out too much cargo capacity from the market
It’s still a very dynamic import market into China. A growing middle class there is able
to afford more and more consumer goods, while China’s manufacturing industry is moving up the value chain and is needing large numbers of materials on which to work. Moreover, it is the stated policy of the government to boost imports, wanting to move China away from a per- ceived economic reliance on exports.
What is more, while exports have undoubtedly been hit by falling consumer and manufacturer confidence in a large num- ber of its export markets, not all of China has been hard hit. Although the big gateways on the east coast may have suffered in terms of their freight throughput, many of the nation’s ‘B’ and ‘C’ class gateways are seeing some explosive growth in their cargo traffic.
The Chinese export market is certainly erratic, or volatile. Overseas markets are jittery and both manufacturers and consumers are nervous about spending. Nevertheless, I don’t think this will be a prolonged downturn.
Cargo carriers operating in the China segment are actually get- ting better at managing capacity into the region, adapting to the volatile nature of the market. There will probably be only a ‘moderate’ peak season, but there is actually a danger of too much freight capacity being taken out of the sector.
The ‘Go West’ policy is also now beginning to be seen in clear effect, with a significant amount of manufacturing moving from the east coast to the interior and western por- tions of the country, where labour is cheaper.
While the likes of Chengdu, Chongqing and Wuhan will not overtake the throughput of bigger airports such as Shanghai in the short or even medium term, these smaller freight gateways will continue to increase their influence.
ForCeva, China remains one of its top five strategic priori- ties. We are investing in air cargo ‘Hubs of Excellence’ at Hong Kong and Shanghai, looking to ensure that they are of world-class quality.
We are intent on pushing the limit on what is possible at these hubs. Meanwhile, these air freight gateways are being sup- ported by the large footprint that Ceva has in China’s domestic network. A large proportion of our business comes from that; we have 88 sites throughout China and that gives us a large catchment area for our air product.
We run our own China trucking network throughout the country and we continue to leverage and develop our do- mestic network. We’ve made big strides in this market, especially over the last decade.
A big benefit that we offer our customers in this market is that we are a full-service provider, offering capabilities such as truck- ing, warehousing and more complex logistics. The Chinese logistics market is becoming ever more so- phisticated and we can cater to that requirement.
30 AIR LOGISTICS CHINA
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