In the air cargo industry, there is a story of "mutual pursuit":

In 1973, the then-little-known FedEx established a super hub at the equally obscure Memphis airport in the United States. Today, Memphis airport has become the world's largest cargo hub, and FedEx ranks first among global express integrators. According to statistics from the Airports Council International (ACI), Memphis airport ranks second in the world's airport cargo and mail throughput with 3.88 million tons, with Hong Kong International Airport, a comprehensive airport, ranking first. In China, cities and express integrators are now aiming at air cargo, trying to become the next Memphis. Ezhou is undoubtedly the most dazzling star. The Ezhou Huahu Airport, which began operations in 2022, is the first professional cargo airport in Asia and the fourth in the world. As of June 8th of this year, its international cargo and mail throughput has exceeded 100,000 tons, with a year-on-year growth of 6835%, leading the country in growth rate. Jiaxing is the next cargo hub under construction. The Jiaxing Nanhu Airport, which is expected to be officially operational in 2025, will be the first professional international cargo hub in the Yangtze River Delta. In terms of routes, all-cargo routes are being launched one after another: on June 28th, the first international cargo route of Anhui Wuhu Xuancheng Airport, "Wuhu-Hanoi," was inaugurated; on July 2nd, Nanchang Changbei Airport opened the first direct international cargo route to Norway, "Nanchang-Oslo." Yang Fan, the general manager of Jiangxi International Cargo Airlines (preparation), lamented to "Finance": "The market and total demand for air cargo are large enough for everyone to have their own cake shop." Cargo hubs and all-cargo routes are weaving a dense network of China's air cargo. From "focusing on passengers and neglecting cargo" to "focusing on both passengers and cargo," China's air cargo is ushering in an important period of development.

Cargo hub construction boom

In the late night at Ezhou Huahu Airport, the lights are still on. Cargo planes that are being palletized, loaded, and de-palletized are ready to fly to all parts of China and even the world, carrying fresh-cut flowers, cherries, mobile phones, and clothing. In May 2020, the Hubei Provincial Government and SF Holding (002352.SZ) jointly invested in the construction of Ezhou Huahu Airport, positioning it as China's first professional cargo hub airport, aiming to become one of the world's top four cargo hubs. From its official operation in July 2022 to December 2023, its cargo and mail throughput increased from 0.005 million tons to 2.45 million tons, with a staggering growth rate of 5240 times during the same period. Since last September, after SF Airlines completed the transfer of cargo routes, the current routine of "group takeoff and landing" and dual runway operation in Ezhou has become the norm, with a maximum of 120 cargo flights taking off and landing per day and a cargo and mail throughput of nearly 3,000 tons. After Ezhou, the construction of the Yangtze River Delta cargo hub is also heating up. In 2024, at the construction site of Jiaxing Nanhu Airport, a broad and smooth runway has taken shape, and the project is aiming to build China's second and the first air logistics hub center in the Yangtze River Delta. Anhui Wuhu is also accelerating the construction of a professional air cargo hub airport with global influence - Wuhu Xuancheng Airport (referred to as "Wuhu Xuan Airport"), striving to be the first to achieve the "global 123 fast cargo logistics circle," which means domestic delivery within one day, neighboring countries within two days, and major global cities within three days. Among the airports that have been built, cargo routes are being densified. Ezhou Huahu Airport has currently opened a total of 69 cargo routes, including 50 domestic cargo routes reaching 45 domestic points, and 19 international cargo routes reaching 22 international points, forming a hub-and-spoke air cargo network covering the whole country and connecting Asia, Europe, America, and Africa. On June 28th this year, the first international cargo route of Wuhu Xuan Airport, "Wuhu-Hanoi," made its maiden flight, and the airport is actively promoting the opening of cargo routes to key cities in neighboring countries such as Japan, South Korea, and Southeast Asia. Jiaxing Nanhu Airport is cooperating with YTO to create the Oriental Sky Harbor project, building a super shared joint distribution center and trade distribution center that connects the whole country and radiates to the world. Professional cargo hubs are continuously being woven in small cities, building a golden bridge in the sky. China is the largest air cargo market in the Asia region, and this market share is still expanding, from 27% in 2007 to 35% in 2022, said Thomas Hong, Director of Cargo Market at Boeing Commercial Airplanes. The booming market is felt more deeply by the cargo companies involved. Yang Fan introduced that this year, Jiangxi Cargo Airlines (preparation) has chartered two self-owned A330 passenger-to-freighter aircraft, operated by Capital Airlines, with a daily utilization rate of 15 hours and an export cargo load rate of 99.8%. "Traditionally, the first half of the year is the off-season for air transport, but we didn't expect the business to be still busy in the first half of this year. Especially in May and June, which should be the off-season of the year, but this year's May and June happened to be our best business period. Of course, the second half of the year is the traditional peak season for air transport, and it should be better," said He Ying, Director of Cargo for Cathay Pacific in Mainland China, to "Finance."

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Where does the boom come from?

The boom in air cargo comes from the unique positioning of air transport. In global trade, although air cargo is far less than sea and land transport in terms of volume, it still plays an important role - the weight of the goods accounts for less than 1% of the total, but the value of the goods accounts for 35%. By 2024, the value of the air cargo market will be about 151.22 billion US dollars, and it will grow at a compound annual growth rate of 5.92% from 2024 to 2029, reaching 201.57 billion US dollars by 2029. Under this "high-value" blue sky of air cargo, China's competitiveness is not enough. "At present, the 777 and 747 freighter fleets of mainland Chinese airlines only account for 10% of the global total," said Thomas Hong. SF is the largest cargo airline in China, with 87 owned freighters as of June 2024. In contrast, FedEx in the United States has more than 600 owned freighters. "Our biggest confusion is that there are not enough aircraft," said He Ying. Although six A350 freighters have been ordered from Airbus, they are expected to arrive only by 2027. In addition to the lack of aircraft, which is not often mentioned but also scarce, is the lack of air cargo hubs. According to the 2023 list of the world's top ten cargo airports released by the Airports Council International (ACI), China only has three seats, namely Hong Kong International Airport (first), Shanghai Pudong Airport (third), and Taipei Taoyuan Airport (tenth); among the top 50 hub airports, there are only six Chinese airports, and they are basically comprehensive airports with passenger transport as the main and cargo transport as the auxiliary. The root cause is the long-term "focusing on passengers and neglecting cargo" operation mode of China's civil aviation industry. For a considerable period in the past, the domestic demand for passenger services far exceeded the demand for cargo services, leading airlines to prefer passenger services in resource allocation. In 2022, the "14th Five-Year Special Plan for Air Logistics Development" was issued, which specifically proposed that in the near term, by 2025, the professional cargo hub airport in Hubei Ezhou will be built and put into use, and express logistics companies such as China Post, SF, and YTO will actively strengthen air capacity construction; in the long term, by 2035, one or two professional cargo hub airports will be built nationwide - this marks a shift in China's civil aviation industry from "focusing on passengers and neglecting cargo" to "focusing on both passengers and cargo."Yang Fan stated that a professional aviation cargo hub is an "all-rounder" in cargo transportation, with the capability to ensure cargo delivery across all categories, business forms, time slots, and timeliness. Such a hub is not only the center of cargo transshipment but also a powerful engine for driving economic development in the city and surrounding areas. "For some oversized and irregularly shaped cargo, the cargo aircraft has a larger belly capacity, and the ground loading technology is more experienced," said He Ying. In addition, research has shown that the professionalism of cargo airports is also reflected in hardware settings and processes. In the design and construction of cargo hub airports, there is often a larger sorting space; professional fixed cargo stations are configured next to the airport runway, allowing cargo to be unloaded and loaded onto aircraft as quickly as possible; there is also a greater emphasis on the storage capacity and automation level of warehouses. For small cities, this is an excellent opportunity. In terms of passenger transport, small cities are limited by the level of economic development and cannot compete with first-tier cities. However, looking at the situation of global aviation cargo hubs, small cities often hold infinite possibilities. The most typical and vivid example is Memphis in the United States. The small city of Memphis, located in Tennessee, was not very well-known until FedEx settled in 1973, and it has become one of the most important logistics hub centers and the most successful aviation cities in the world. Since 1992, Memphis International Airport has been the busiest cargo airport in the world and is currently the second-largest cargo airport globally, with a cargo and mail throughput of 3.88 million tons in 2023. Becoming Memphis has a huge attraction for small cities. Ma Chuanxi, Vice Chairman of the Anhui Provincial Political Consultative Conference, said that Wuhu Xuancheng Airport is positioned as a professional aviation cargo hub airport and is an important member of Anhui Province's "one hub and ten branches" transportation airport system. Wuhu's position as an important carrier for the development of Anhui's export-oriented economy is more prominent, becoming an important window for Anhui to integrate into the Yangtze River Delta, link the central and western regions, and connect with the world. Chen Wei, Secretary of the Jiaxing Municipal Committee, said that in the development blueprint of Jiaxing, the airport is the "explosive point" and "golden wings" for future development. In the future, the airport will become a "magnet," providing a convenient window and channel for the surrounding areas to connect with the domestic and link with the global.

Professional small airports + comprehensive large airports

There are many cities vying to become the "Chinese Memphis," including not only rising stars like Ezhou, Jiaxing, and Wuhu, but also inland hub cities such as Chongqing, Zhengzhou, and Xi'an. In addition, developed cities like Shanghai, Shenzhen, and Guangzhou are also actively deploying cargo transportation by leveraging their existing advantages. The positioning of cities entering the airport market is complex, but it can be summarized into two types: comprehensive hub airports and professional cargo hub airports, according to the "Opinions on Promoting the Development of Aviation Cargo Facilities" issued by the National Development and Reform Commission and the Civil Aviation Administration. "Finance and Economics" has found that most of the professional cargo hub airports are under construction in small cities, with only Ezhou Huahu Airport currently in operation, and in the future, there will be Jiaxing Nanhu Airport and Wuhu Xuancheng Airport.

Geographical location is the primary consideration for professional cargo hubs, which is also the site selection idea for Memphis. Li Sheng, Vice President of SF Group and Chairman of SF Airlines, has previously stated publicly that an aviation hub should meet four conditions: first, functionally, it should avoid aviation passenger transport and avoid provincial capitals and densely populated cities; second, it should be located in the center of the country, with a two-hour flight covering 80% of the GDP (Gross Domestic Product) generating areas; third, functionally, it should have a good connection with other transportation modes such as railways and highways; and fourth, the local airport should have complete port functions. Ezhou is located at the "center of China's economic geography," meaning that with Ezhou as the center and a 1500-kilometer radius, a two-hour flight can cover more than 90% of the country's economic and population areas.

Jiaxing is adjacent to Shanghai in the east, Hangzhou in the west, and Suzhou in the north, located at the golden hub of the Yangtze River Delta metropolitan area. With this location as the center, a two-hour flight can cover areas that account for 90% of China's GDP, and a three-hour flight can cover 1.2 billion people globally, with huge potential for air logistics. However, comprehensive hub airports remain the mainstream, characterized by the combined development of passenger and cargo transport.

Globally, seven out of the top ten airports in cargo and mail throughput are comprehensive airports, and most of these airports also rank in the top 20 globally in terms of passenger throughput. Among the top 20 airports in China by cargo and mail throughput, 19 are comprehensive hub airports. It is not difficult to find that China's comprehensive hubs are basically located in first-tier cities or provincial capitals and other large cities. The most direct reason is that the business volume of comprehensive airports is also related to passenger transport, so they are mostly located in densely populated and economically developed cities. The deeper reason is that under the long-term "focusing on passengers and neglecting cargo" business model of China's civil aviation industry, cargo transportation often relies on passenger transport, making the layout of China's air cargo highly coincident with air passenger transport. The National Development and Reform Commission has determined and officially released the 2023 National Logistics Hub Construction List, with 30 national logistics hubs including Shanghai Airport Type, Hangzhou Airport Type, Qingdao Airport Type, Wuhan-Ezhou Airport Type, etc., being selected. So far, there are 13 approved airport-type national logistics hubs, namely Zhengzhou, Beijing, Shenzhen, Tianjin, Chongqing, Xi'an, Nanjing, Guangzhou, Chengdu, Shanghai, Hangzhou, Qingdao, Wuhan-Ezhou. Both large and small airports are accelerating construction.

The domestic air cargo station project of Beijing Capital Airport started in July this year. After the completion of the project, the annual cargo handling capacity is expected to reach 500,000 tons; Kunming Changshui International Airport is expanding the east cargo area of the project, with the domestic cargo warehouse already built and the international cargo warehouse under construction, and the future cargo and mail throughput can reach 395,000 tons; Chongqing Jiangbei Airport will accelerate the planning and construction of Chongqing's new airport on the basis of the fifth phase of expansion, creating an air cargo hub in the western region... In these comprehensive hubs, differentiation is also gradually emerging. Beijing, Shanghai, Guangzhou, Shenzhen, and Zhengzhou have become international cargo hubs. The "2023 National Civil Transport Airport Production Statistics Bulletin" shows that the six airports in these five cities account for 90% of the country's international cargo volume; regional backbone hubs support domestic air transport, with Chengdu, Chongqing, Kunming, Zhengzhou, Wuhan, Xi'an, Shenyang, Urumqi, and other cities growing into aviation hubs in their respective regions. China is gradually moving from a logistics power to a logistics powerhouse, and cities are also competing to seize the huge opportunities under the dividend of the times.Behind-the-Scenes Express Integrators

For freight hubs, the availability of sufficient cargo support is the most critical factor. The sources of cargo for comprehensive freight hubs often come from the accumulation of civil aviation and special regional industries. The accumulation of civil aviation is particularly evident in Beijing, Shanghai, Guangzhou, and Shenzhen. Beijing is the headquarters of China International Cargo Airlines, Shanghai Pudong Airport is the headquarters of China Cargo Airlines and the international transit center for UPS, Guangzhou Baiyun Airport is the express transit center for FedEx in Asia, and Shenzhen Bao'an Airport is the headquarters of SF Express and the Asia-Pacific transit center for UPS. The typical representatives of special regional industries are Zhengzhou and Hangzhou. Since 2010, with the entry of Foxconn into the Zhengzhou Airport Economic Comprehensive Experiment Zone, the electronic information industry cluster has continued to grow, providing a stable source of cargo for Zhengzhou Xinzheng Airport; Hangzhou, as one of the most developed e-commerce regions in China, has attracted logistics companies such as YTO Express, SF Express, Best Express, and Cainiao, providing a continuous stream of express cargo for Xiaoshan Airport. "The rapid rise of e-commerce platforms is quickly stirring up the global air cargo industry, leading to a sharp increase in demand for air transport, especially the volume of goods transported to overseas markets," Yang Fan told Caijing. Thomas Hong introduced that, taking SHEIN as an example, the previous daily air cargo volume was 3,000 tons, and the daily shipment in December will reach 5,000 tons. Coupled with TEMU, Alibaba, and TikTok, the combined daily air cargo of the four platforms is about 10,800 tons, equivalent to the cargo capacity of 108 Boeing 777 freighters. For professional freight hubs located in small cities, the competition for cargo sources is actually a competition behind the scenes among express integrators. FedEx, the global top three integrator behind Memphis, has a strong cargo collection capability, providing it with ample cargo sources. 94% of FedEx cargo must be transited through Memphis Airport before providing services to 220 countries and regions worldwide, bringing more than 5,000 flights to Memphis each month. In terms of operation mode, the small city cargo airports under construction in China have all followed the "Memphis Model," which is the joint development of express integrators and freight hub airports. SF Express has increased its investment in Ezhou, JD.com has bet on Wuhu and Nantong, and YTO Express has stood behind Jiaxing. SF Express started its air transport early, YTO Express has a large express business, and JD.com relies on e-commerce platforms. Reviewing the 2023 annual reports of the three companies, SF Express's global air cargo volume exceeded 2.1 million tons, accounting for 33.8% of the national air cargo and mail transport volume; YTO Express's business volume reached 21.204 billion pieces, a year-on-year increase of 21.31%, with a total revenue of 52.269 billion yuan, of which the annual revenue of air business was 1.199 billion yuan; JD Logistics's express and fast transport business grew rapidly, with a total revenue of 85.2 billion yuan in 2023, a year-on-year increase of 42.0%. The three companies each have their strengths, but they are still far from the world's top express integrators. The most urgent constraint at present is the size of the fleet. The fleet sizes of the top three global express integrators, FedEx, DHL, and UPS, are all over 200, with FedEx's scale reaching more than 600. SF Express is already the largest cargo airline in China, but as of June 2024, it only has 87 owned full-cargo aircraft. YTO Express only has 13 full-cargo aircraft, not to mention JD Shipping, which was just established in 2022. Due to the current lack of professional airports and full-cargo aircraft, comprehensive hub airports bear almost all the cargo volume, with two-thirds of the cargo still provided by the belly of passenger aircraft. However, in the long run, establishing a core freight hub, that is, a transit station, to achieve rapid collection and distribution, is a better choice to improve the efficiency of cargo aircraft use, cargo turnover efficiency, and reduce cargo transportation time. The new development model of "express integrator + small city" will inevitably lead to cost reduction and efficiency improvement, thus changing the current "passenger aircraft belly + big city + comprehensive airport" dominated air cargo spatial pattern. In addition, professional freight hub airports can drive not only the logistics industry. Global development experience has shown that a freight core hub can bring huge economic contributions to the local area, trigger a butterfly effect, and promote the development of other high-end industries. After the gradual formation of the aviation + logistics industrial cluster, a large number of high-end manufacturing industries that are sensitive to timeliness and have large order randomness began to settle in Memphis, thereby driving the aggregation of the trade industry and related production services, forming an airport-centered aviation industry area, and further bringing a huge air cargo business to FedEx. For cities that are building cargo hubs, in addition to learning from Memphis's construction model, the next urgent issue to consider is how to achieve mutual empowerment between the airport and the local area, so that the airport is not just a place for transporting passengers and goods. Which city will be the first to become "China's Memphis" is still uncertain, but it is certain that China, which is transitioning from a logistics power to a logistics powerhouse, needs "Memphis," and more than one. The competition for air cargo hubs has just begun.