Growing demand in China, and throughout the Asia Pacific (APAC) region, due to its strong industrial base and growing consumer market, provides increasing opportunities for the air cargo industry.
After starting with an office in Hong Kong, Air Charter Service (ACS) has added Beijing and Shanghai to meet growing demand by tapping into local insights.
“ACS’s long-term presence in key Asia-Pacific hubs is critical to maintaining strength amidst increasing competition from competitors,” said Joseph Tam, ACS Regional Shipping Director – Greater China. “Our deep market knowledge, strong relationships and trusted reputation allow us to deliver exceptional rental solutions.
“A strong presence on the ground in the Asia-Pacific region is critical for ACS to respond quickly and effectively to any disruptions or challenges, such as geopolitical tensions, natural disasters, or market shifts,” Tam continued.
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Expansion of e-commerce
When looking at the volume of goods in Asia, one sector that looms large is e-commerce. From 2016 to 2021, e-commerce sales increased five-fold annually. In 2022, e-commerce transactions in Southeast Asia rose to nearly $100 billion. These numbers are expected to grow further in the coming years.
Throughout 2023, rental rates in the Asia-Pacific region started at their lowest levels in the first quarter, then rose steadily due to demand for e-commerce goods from China, peaking in the fourth quarter.
ACS expects a similar trend in 2024, with rental rates affected by e-commerce merchandise volumes from China, unless there is a marked improvement in general merchandise volumes – which were weak last year due to the global economic situation.
Carriers have higher price expectations due to the levels seen in Q4 2023 and the situation in the Red Sea, but ultimately, ACS believes prices will match market demand.
“The e-commerce market, especially from China, has had a huge impact on the charter sector,” Tam explained.
“Due to weak overall demand for cargo, the market has become dominated by a few large e-commerce operators based in China. The large freight volumes of these companies have a significant impact on market prices and demand within the charter industry.
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New strategy?
Rising labor costs, geopolitical tensions and Covid restrictions that have lasted longer than many other Asian countries have led the logistics sector to adopt the phrase “China plus one.”
Seeking to reduce supply chain risks in the future, manufacturers, retailers, logistics service providers and freight carriers are turning to other Asian countries, reducing their dependence on China.
Places such as Malaysia and Vietnam have emerged as alternatives for some, while ACS has looked to opportunities in Singapore and Thailand, all countries with strong infrastructure and expanding shipping industries.
“The ‘China Plus One’ strategy has pushed ACS to adopt a more flexible approach in the Asia-Pacific region,” Tam stated. “We are expanding into Southeast Asia with our new offices in Singapore and Bangkok to meet the needs of businesses chartered not only from China, but also from emerging markets in the region, and adapt to shifts in manufacturing.
“Although Singapore outperforms Hong Kong in the World Economic Freedom Index, it remains a high-ranking location for trade freedom and regulation, and is therefore an important office for the ACS in the Far East,” Tam continued. “We are also strengthening our presence in Singapore and other vital markets in Southeast Asia, such as Bangkok, to maintain our competitiveness and adapt to changes in the business environment.”
