Case Study

Why China relies on air freight

Economic Trade

Air freight is the preferred mode of transport for the new global economy’s high value-to-weight manufactured goods such as microelectronics, pharmaceuticals, aerospace components and medical devices. The electronics industry accounts for around 40% of the value of the entire international air cargo industry.

For the economies of Asia, where there is relatively little cross-border land transport compared to North America and Europe, air cargo is a vital bridge to the global market. Malaysia, China and Singapore have excellent ocean access to busy shipping routes but are also heavily dependent on air freight for imports and exports. They have been integrated into the global electronics production chain because they send their products to North America and Europe by air within 24 or 48 hours – by ship this would take up to 30 days. It may cost seven times more to carry goods by air than by sea, but when the cargo comprises time-sensitive products that rapidly suffer from obsolescence, such as computers, MP3 music players and cell phones, these goods have a relatively short marketing life and every day counts.

Nearly 60% of the world’s air freight is carried on routes between North America, Western Europe and Southeast Asia. As air-freighted electronic goods are incorporated into an increasingly wide number of domestic and professional equipment throughout all sectors of the economy, large parts of the economies of Europe and North America have effectively become dependent on these trade routes.

The fastest growing air cargo market in the world is between China and North America with an annual growth rate of more than 10% year on year since 1995. Around 40% of air freight shipped from China to the USA comprises consumer goods and 29% high-tech products, such as computer electronics. China is now the second largest air freight market after the USA, and depends increasingly on air cargo to get its high tech goods to market.