Thursday, July 18, 2024
Opportunity in Asia

Opportunity in Asia

Burgeoning demand in China, and across the Asia-Pacific (APAC) region, due to its robust manufacturing base and growing consumer market, is presenting increasing opportunities for the airfreight industry.

Having began with an office in Hong Kong, Air Charter Service (ACS) has added Beijing and Shanghai as it meets the increasing demand by tapping into local insights.

“ACS’s longstanding presence in key APAC hubs is crucial to maintaining strength amid increasing competition from rivals,” Joseph Tam, ACS’s Regional Cargo Director – Greater China, stated. “Our deep market knowledge, solid relationships, and reputation for reliability allow us to provide exceptional charter solutions.

“A strong on-the-ground presence in the APAC region is critical for ACS to respond promptly and effectively to any disruptions or challenges, such as geopolitical tensions, natural disasters, or market shifts,” Tam continued. 

READ: Air Charter Service sees EV supply chain transform charter market

e-commerce expansion

When looking at cargo volumes in Asia, one sector looms large – e-commerce. From 2016 to 2021, e-commerce sales grew fivefold annually. In 2022, e-commerce transactions in Southeast Asia surged to nearly $100 billion. These figures are only set to grow larger in the coming years.

Throughout 2023, charter rates in the Asia-Pacific region started at their lowest in Q1, then steadily increased due to the demand for e-commerce cargo from China, peaking in Q4. 

ACS anticipates a similar trend in 2024, with charter rates being influenced by e-commerce cargo volumes from China, unless there is a marked improvement in general cargo volume – which was weak last year due to the global economic situation. 

Carriers have higher expectations for rates due to the levels seen in Q4 2023 and the situation in the Red Sea, but ultimately, ACS believes rates will align with market demand.

“The e-commerce market, especially from China, has had a huge impact on the charter sector,” Tam explained.

“Due to weaker general cargo demand, the market has become dominated by a few large e-commerce players based in China. These companies’ substantial cargo volumes have a significant influence on market rates and demand within the charter industry.

READ: Charter sector climbs high amid challenging aviation outlook

A new strategy?

Increasing labour costs, geopolitical tensions and Covid restrictions that continued longer than many other Asian countries has seen the logistics sector embrace the phrase ‘China Plus One’.

Looking to reduce supply chain risks in the future, manufacturers, retailers, logistics providers and cargo carriers are all turning to other Asian nations, cutting down on their dependency on China.

Places like Malaysia and Vietnam have arisen as alternatives for some, while ACS has looked to the opportunities in Singapore and Thailand, all nations with strong infrastructure and expanding cargo industries.

“The “China Plus One” strategy has prompted ACS to adopt a more flexible approach in the APAC region,” Tam stated. “We’re expanding into Southeast Asia with our newer offices in Singapore and Bangkok to cater to charter business, not only from China, but also from emerging markets in the region, adjusting to manufacturing shifts.

“Despite Hong Kong being surpassed by Singapore in the Economic Freedom of the World index, it remains a top-ranking location for trade freedom and regulation, and thus a crucial office for ACS in the Far East,” Tam continued. “We’re also strengthening our presence in Singapore and other vital Southeast Asia markets, like Bangkok, to maintain our competitive edge and adapt to business environment changes.”

Picture of James Graham

James Graham

James Graham is an award-winning transport media journalist with a long background in the commercial freight sector, including commercial aviation and the aviation supply chain. He was the initial Air Cargo Week journalist and retuned later for a stint as editor. He continues his association as editor of the monthly supplements. He has reported for the newspaper from global locations as well as the UK.

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