A central Chinese showcase
“Buy the world, sell the world” was the clear mission that Chinese president Xi Jinping set for a new e-commerce logistics centre in Zhengzhou when he visited the centre to assess its progress. ITJ editor Andreas Haug recently experienced how the deployment of all modes of transport is combined there with the favourable geographical location of one of China’s key economic development zones.
Zhengzhou, which is located halfway between Beijing, the capital of the world’s most populous country, and the port of Shanghai, the world’s largest container hub, is considered one of the cradles of Chinese civilisation. But visitors to the eastern Chinese inland metropolis, which has approximately 10 million inhabitants, will seek tourist attractions from the city’s 3,000 year history in vain. The focus of today’s city authorities is firmly fixed on the future. The central government has expressly sanctioned this approach. The declared aim of all concerned is to push forward with the rapid economic and social development of the nation, starting from the coastal regions and then enabling the vast hinterland to benefit from progress too. There are not many places that are more suitable for this than the capital of the country’s third-largest province Henan, which has a population of more than 90 million people.
From the primary sector to high-tech pioneers
Until a few years ago Zhengzhou, which is located in the fruitful loamy region of the nearby Yellow river, was still characterised largely by the agricultural sector, as well as being at the heart of a major coal-mining area. After the People’s Republic was established in 1949 the metropolis developed strongly, thanks to the cultivation of cotton, amongst other things. The development of the city to a centre of trade and industry dates from the setting up of economic and technology-development zones from the beginning of the 1990s. This resulted in globally-renowned specialist enterprises settling in the greater Zhengzhou area. In 2015 no less than 104 million telephones sporting the Apple logo were manufactured in the Zhengzhou airport international economic zone. This represents one seventh of the world production of this typical airfreight product.
Companies settling in this airport economic zone, which was authorised in 2010 and opened in November 2011, benefit from its proximity to one of the world’s fastest-growing airports. The hub, which is run by the Henan Airport Group, handled 86,000 t of airfreight in 2010. In the meantime the throughput of the eighth-largest Chinese air cargo gateway has risen substantially, namely to 403,000 t in 2015. This year the managers expect to handle more than 500,000 t, with 60% thereof accounted for by international shipments. In the light of this expected development the airport with the Iata code CGO is set to grow from two to five runways.
A European Grand Duchy’s presence in China
The Henan Civil Aviation Development & Investment Company (HNCA) has played a major role in the latest growth. Its 35% stake in Cargolux, acquired in January 2015, is the basis for the strong presence of the player from the European Grand Duchy of Luxembourg in Zhengzhou. The full-freighter operator has defined Zhengzhou as its second hub, and is currently setting up the joint venture Cargolux China there, which is set to serve trans-Pacific routes by the end of 2017. It will initially deploy three Boeing B747Fs; three years later there will be five B747Fs in the fleet. “We’re currently in the process of completing the formalities with the Chinese civil aviation authority,” is how Wieger Ketellapper described the current status of the negotiations. The Dutchman, the vice-president of Cargolux China Joint Venture Development, has been based in Zhengzhou since last year.
Other international airlines are also making the best possible use of the infrastructure conditions at the airport, which currently has five freight terminals in two zones. In June the Russian operator AirBridgeCargo Airlines became the latest new full-freighter operator to be added to the roster of firms operating from there, with Australia’s Qantas also offering a scheduled service to Sydney from there.
Cargolux’s Zhengzhou RFS network covers 20 Chinese cities. Trucks reach Guangzhou, in the Pearl River Delta – sometimes called the factory of the world – in around 24 hours. The ports of southern and eastern China can be served rapidly by rail from Zhengzhou too. On top of this, for the past three years, the transport hub has been the largest cargo handling station on the trans-Siberian and Central Asian railway lines linking the Far East and Rotterdam. Goods are shipped in both directions on these lines in the meantime, as Shi Wensong, the vice-president of the Zhengzhou International Hub Development and Construction Company, points out. “There are three westbound blocktrains a week, and in August we added a third eastbound train, which hauls up to 80 containers from Europe.”
Ketellapper is not scared for his own business by competition from the railways, which are twice as fast as maritime shipping but only half as costly as airfreight solutions. “The modes can be of great interest for us too when it comes to on-forwarding airfreight,” the air cargo manager says, assuming an intermodal approach.
The Luxembourgian firm has entered into partnerships in other fields in Zhengzhou too. Cargolux makes sure that its new Luxfresh platform can ship European delicatessen directly to Henan at prices that the growing Chinese middle classes can also afford. The Henan bonded logistics centre, which started operating China’s largest fully-automated e-commerce warehouse in August (covering 50,000 sqm), most clearly symbolises efforts to drive up sales. There the mail order firm Jumei dispatches up to 1.5 million orders a day. Amazon’s record stands at 800,000.
It is not a coincidence that the US giant gets a mention here, as the company’s business model is consciously being copied, according to the bonded logistics centre’s director Xu Ping, in order to create a global impact, first in Europe and then in North and South America and in Russia. Customs formalities are the biggest challenge, the manager says, not the aviation links – thanks to partner Cargolux.