Yuantong aviation dream bumps into reality: market competition intensifies and the plan can’t catch up with changes
With the formal establishment of JD Airlines last year, China’s private cargo aviation market has formed a tripartite trend, and Yuantong airlines will face more fierce competition.
On January 14, a Boeing b767-300erf aircraft painted with the main image colors of Hangzhou 2022 Asian Games “Hongyun purple” and “Asian Games” landed at Hangzhou Xiaoshan International Airport and officially joined the Yuantong aviation fleet.
This is the first wide body cargo aircraft introduced by Yuantong airlines under Yto Express Group Co.Ltd(600233) . Over the past seven years, Yuantong has continued to layout the aviation market, and its self organic team has begun to take shape, and the air cargo business has become the third largest business segment of Yuantong.
However, there is still a big gap between Yuantong’s fleet and China Post and SF, which is difficult to catch up in the short term. Yuantong Jiaxing aviation logistics hub, which occupies the core position in Yuantong aviation territory, has also failed to land. On the other hand, with the formal establishment of JD Airlines last year, China’s private cargo aviation market has formed a tripartite trend, and Yuantong airlines will face more fierce competition. In this case, can Yuantong stabilize the starting advantage? In the competition with SF and JD, where will Yuantong be?
Seven years to build aviation territory, stuck in “buying aircraft”?
According to the statistics of forward looking Industry Research Institute, in the international market, the global cargo aircraft transportation is mainly concentrated in the hands of FedEx, DHL and UPS, of which FedEx’s full cargo aircraft fleet is the largest, with a total of 684 as of May 31, 2021, including 662 owned and 22 leased.
China’s air transport development is not long. According to the annual report of China’s market forecast for civil aircraft, as of the end of 2020, the total number of registered Chinese mainland cargo ships was only 186.
In recent years, with the development of cross-border e-commerce and cold chain transportation and the need for material transportation during the epidemic, the importance of air freight has become more and more prominent. The deployment of air transport capacity has become an important weight for express companies to compete for the timeliness of products.
Yuantong has shown foresight in this regard. Yu weijiao, chairman of Yto Express Group Co.Ltd(600233) , has repeatedly said in public: “express companies without aircraft are not real express companies.”
As early as 2015, when the industry was not optimistic, Yuantong signed a contract to buy 15 Boeing aircraft and establish Yuantong aviation, becoming the only express enterprise in the Tongda system with its own air freight company. In addition, Yuantong also signed sales agency agreements for air cargo and mail transportation in China with Sichuan Airlines and China Cargo Airlines Co., Ltd.
According to Yuantong’s financial report, as of the first half of 2021, Yuantong Airlines has 10 cargo aircraft, including 6 Boeing 757-200 and 4 Boeing 737-300. The route has basically covered Southeast Asia, Northeast Asia and other regions. Yuantong pointed out in the financial report that it is necessary to actively introduce large and medium-sized, long-range all cargo aircraft and deeply expand the commercial operation of its own airlines.
According to a research report of Sealand Securities Co.Ltd(000750) , under the layout of “automobile transportation is the main and aviation is the auxiliary”, the transportation capacity of Yuantong all cargo aircraft currently accounts for about 3% of the national freight transportation capacity. Aviation has now become the third largest business after Yuantong express business and freight forwarding business. In the first half of 2021, Yuantong’s aviation business revenue reached 589 million yuan, accounting for about 3.02% of the total revenue, and the gross profit margin was 13.97%, higher than that of express and freight forwarding business.
Last year, Yto Express Group Co.Ltd(600233) signed a contract to become the official logistics service sponsor of the 2022 Hangzhou Asian Games. Xin ZHAOFEI, vice president of Yuantong international and head of the Asian Games logistics service command center, pointed out in an interview that international events have special needs for logistics and need to be guaranteed by efficient air transportation.
With forward-looking vision and generous investment, Yuantong has gained a foothold in the field of air cargo. However, Yuantong still has a long way to go to catch up with SF and China Post.
According to public information, by the end of 2021, SF had 68 all cargo aircraft and China Post had 33 all cargo aircraft, which were several times higher than Yuantong airlines.
Last May, Yto Express Group Co.Ltd(600233) president pan Shuimiao said that Yuantong plans to introduce five aircraft with greater carrying capacity in 2021, including three Boeing 757 aircraft and two Boeing 767 aircraft. However, according to the interface news, due to the epidemic and other reasons, this plan has not been completed until today.
“According to the reports of several consulting agencies, due to the epidemic and changes in the global supply chain, there will be a shortage of aircraft in China, the Middle East and even the whole European and American markets in the future, so the competition for aircraft will be a very key indicator for a company.” Express logistics expert and CEO of guanshuo capital Zhao Xiaomin said in an interview with interface news.
Yuantong did not disclose the number of existing aircraft, but only said that it will continue to introduce B757, B767 and other main models of cargo aircraft this year, and it is expected that the fleet will reach 19 by the end of the year.
invested in the construction of aviation hub and failed to land
In addition to buying aircraft, Yuantong Jiaxing aviation logistics hub, a global aviation logistics hub project participated by Yuantong, is also stepping up its landing.
According to the latest news, Sinomach China United Engineering Co., Ltd. won the bid for the design of “Dongfang Tiandi port” project of Yuantong Jiaxing global aviation logistics hub, which means that the project has made key progress. However, compared with the original plan, the promotion rhythm of Yuantong Jiaxing hub is still too slow.
As early as July 2018, Yuantong Group signed a strategic investment agreement with the people’s Government of Jiaxing City, Zhejiang Province. It plans to invest 12.2 billion yuan to build a global aviation logistics hub in Jiaxing, and rely on the hub to build a super shared joint transportation center and trade distribution center based on the Yangtze River Delta, connecting the whole country and radiating the whole world.
According to the agreement, the first phase of Jiaxing logistics hub project covers an area of 1454 mu, with 94 planned freight stands. The recently planned cargo and mail throughput is 1.1 million tons / year, and the throughput will reach 2.4 million tons / year by 2050. Su Xiufeng, chairman of Yuantong Cargo Airlines, said that Yuantong will use Jiaxing airport to build an aviation logistics network system covering the whole country and reaching the world.
The project was originally planned to start in 2018 and put into use in 2021, but there has been no movement within two years after signing the contract. In 2020, Yuantong Jiaolong Group signed another contract with Jiaxing Municipal government to re promote the investment and settlement of the project, and further planned functional blocks such as international cargo terminal, Chinese cargo terminal, public cargo terminal, aircraft maintenance base, bonded logistics center, import distribution and distribution center and cold chain center.
However, it was not until January this year that Yuantong Jiaxing aviation logistics hub project appeared again in the centralized commencement of major projects to expand effective investment in the province in 2022 held by the CPC Zhejiang Provincial Committee and the provincial government. It is reported that all projects participating in the commencement activities will ensure the substantive commencement of construction before the end of March.
At the same time, Hubei Ezhou Huahu Airport (hereinafter referred to as “Ezhou airport”) of Shunfeng has entered the school flying stage and will be opened soon. It is expected that the cargo and mail throughput will reach 2.45 million tons in 2025 and 3.3 million tons in 2030, far exceeding Yuantong Jiaxing hub.
Jingdong joined the war and added a strong opponent
Although the scale of Yuantong Airlines lags behind SF and China Post, until last year, Yuantong was still one of the only two private express enterprises in China with its own airlines. Jingdong’s accession broke this pattern. On August 3, 2021, Jiangsu Jingdong Cargo Airlines Co., Ltd. (hereinafter referred to as “Jingdong Airlines”) under Jingdong was approved, forming a tripartite confrontation with Yuantong airlines and SF airlines.
Jingdong airlines, backed by Jingdong group, has great potential. Although JD logistics has not had its own fleet before, and mainly develops air transportation by means of cabin charter and leasing, according to JD’s open project plan, the fleet size of JD airlines will reach 114 by 2025 and 501 by 2045. Jingdong invested 95 billion yuan to build a global air cargo super hub port. It is expected that the cargo and mail throughput will reach 2.33 million tons in 2025 and 8 million tons in 2045.
In contrast, the design goal of Jiaxing airport, which is supported by Yuantong hub project, is only 100000 tons of cargo and mail throughput and 1.8 million passengers per year. This figure is located between Ningbo Lishe Airport and Sanya Phoenix Airport, ranking about 30th among airports in China. The volume is really not large.
Zhao Xiaomin believes that although the threshold for the layout of air cargo is very high and requires a lot of capital support, with the entry of JD, the market competition has been very fierce, and the binding mode of airline + airport construction has become the mainstream.
“We must follow the model of joint fleet. It is difficult to make a big breakthrough in this field.” He said.
