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Cargo

Speeding ahead

Hong Kong-based Jet-Speed Air Cargo Forwarders, due to celebrate its 50th birthday next year, is looking beyond China’s economic wobbles to find growth in promising sectors and emerging regions, as Helen Massy-Beresford discovers
 

Jet-Speed Air Cargo Forwarders has, unsurprisingly, witnessed a lot in the nearly 50 years it’s been in business – and Arthur da Silva, Managing Director and Chairman, says the company is expecting a lot more from the next 50 years too, if global economic and consumer trends can combine to drive demand.

 

Jet-Speed, founded in 1967 and one of the first air freight management companies in Hong Kong, will celebrate its 50th birthday in 2017, having grown into a global business with more than 300 employees and 25 offices worldwide. But before it dons its party hat, the company, like its peers, must get through a challenging 2016, says da Silva.

 

“The air cargo demand in the Asia-Pacific region was not good in 2015, mainly due to overcapacity in the air freight space from January to September; the market was slack and cargo demand was not strong,” he explains. China exports showed a drop of 3-4% last year, while all other areas in the Asia-Pacific region also tracked a downward trend.

 

There have, of course, been bright spots, and these are where Jet-Speed is hoping growth will come from in 2016 and beyond. “An area that did grow quite strongly in 2015 was e-commerce, where the parcel express business increased by 30%, especially in China. I understand from my carrier friends that the rate from India to Europe was particularly bad and business has been very tough in India. However, we did see a peak season in Hong Kong and China from 20 October. The peak was fairly strong; in fact I would say a little bit stronger than 2014 with its pre-Christmas cargo rush.”

 

This year is likely to be another slow year, says da Silva. “I believe the market will remain slow like 2015, mainly due to the European economies not picking up, while Chinese exports are expected to continue to show a slow decline due to labour costs going up quite heftily in China.”

 

Air cargo operators will be watching currency developments closely in China, with prospects for business to and from the huge market dependent on exchange rates, da Silva says: “If the yuan weakens, we might see a slight increase in exports, but not drastically.  If the yuan strengthens, then we will see a good increase in imports in China, especially since the Chinese government has clearly stated that it wants to maintain GDP growth through domestic consumption, rather than for export driven business.

 

“Since the yuan joined the IMF SDR reserve currency no one can really predict if it will strengthen or weaken. I personally think it will strengthen, as China will not wish their balance of payment surplus to keep increasing, otherwise they will start experiencing pressure from the US government again.”

 

As 2016 gets underway, all eyes are on the Chinese economy – with fears of slowing growth at home and weaker exports. A sharp fall in the yuan against the dollar in December sparked a stock market plunge, but data showed a smaller than expected fall in exports for the same month.  >>


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