Expensive tastes help boost airfreight volumes to China

Demand for sashimi has boosted imports of fresh fish. Photo / Bloomberg

Xin Jing spends about 200 yuan ($41) on Japanese sashimi each time she visits the city'super grocery store in Shanghai. Her appetite is helping fill cargo planes bound for China, boosting profit at Cathay Pacific.

"Sashimi is my favourite food," said Xin, 29, who runs a small commodities trading firm. "I tend to buy a lot of fresh stuff once a week."

As increasingly wealthy Chinese consumers eat more imported fresh fish, lobster and cheese, they are helping global air cargo revenue rebound from the worst decline in five decades last year. Fuelled by growing demand for luxury goods and perishable foods from overseas, the nation will lead an 18.5 per cent recovery in air shipments this year, according to a June estimate by the International Air Transport Association.

"China has attracted more investment and luxury brands, as purchasing power has gotten much stronger," said Kelvin Lau, an equity analyst at Daiwa Institute of Research in Hong Kong. At Cathay Pacific, cargo, which represents about a third of revenue, "would provide a very good support for a rebound in profits", he said.

Rising domestic consumption boosted China's imports 53 per cent in the first half of this year, reducing a trade imbalance that's caused air-cargo haulers to fly empty planes into the nation to fill up on export goods.

China's middle class, with annual disposable incomes between $6000 and $20,000, may rise to 46 per cent of households by 2020 from 32 per cent this year, London-based research firm Euromonitor International said in March. The world's fastest-growing major economy may expand 9.5 per cent this year, Citigroup said this month.

To meet rising demand, Hong Kong-based City'super and Italy's Salvatore Ferragamo are adding more outlets, and Cathay Pacific is putting parked cargo planes back into service.

United Parcel Service, the world's largest package-delivery company, has added two cargo planes in Hong Kong and one in Shanghai this year. FedEx, the world's biggest air- cargo carrier, is planning to buy more freighters for its longest routes to Asia. Both companies increased their profit forecasts this month, citing growth in Asia.

Global air-cargo volumes dropped 10 per cent last year as the worst global recession in six decades crimped world trade. This year, Korean Air, the world's largest international air-freight carrier, is predicting cargo volumes may surpass the record set in 2007.

Air-cargo volume to China from North America may increase 7.8 per cent annually in the next 10 years, according to Air Cargo World's website. Air shipments to China from western Europe may grow 8.3 per cent a year. Airlines in the Asia-Pacific region represent 45 per cent of international scheduled freight demand.

Cathay Pacific, Hong Kong's biggest carrier, started having a greater balance between outbound and inbound cargo in the fourth quarter of 2009, chief operating officer John Slosar said. "Traditionally, the flights going out would be absolutely full because of China exports, but flights coming back would not be so full."

The carrier is flying 100 tonnes of lobster and 150 tonnes of grouper to China and Hong Kong every month from Australia and Indonesia. It increased shipments of sashimi-grade fish to the nation from Tokyo by 60 per cent to 80 tonnes in the first four months, said Vivian Lo, the carrier's cargo sales and marketing manager.

"China's emergence as the world's biggest consumer will resolve the issue of direction imbalance at airlines," said Chi Chang Hoon, president of Korean Air. "China consumer goods import demand should spur cargo shipment from Europe and the US in the long term."

K. Ajith, a Singapore-based analyst at UOB-Kay Hian Research, said the increase in luxury-goods imports may not last as China phases out economic stimulus measures.

City'super opened its first store in Shanghai in May.

"Consumers in Shanghai are very curious to try out new imported food," said Thomas Woo, president of the local outlet.

"They are getting used to shopping expensive fruits, olive oil, red wine and sake as gifts."

- Bloomberg