By ()
Updated: 2007-06-14 16:56

Just Shanghai? That is not enough.

The Yangtze River Delta, China's manufacturing powerhouse, may need a second cargo gateway.

Hangzhou could be the next location, as the capital of East China's Zhejiang Province is attracting the attention of international express delivery companies and cargo carriers.

German express and logistics giant DHL last month announced a new dedicated flight connecting Qingdao of Shandong Province and Hangzhou with DHL's Central Asia hub in Hong Kong. It also started gateway operations at the Hangzhou Xiaoshan International Airport.

The service allows DHL to pick up packages from Shandong and Zhejiang provinces, clear the goods through customs at Hangzhou airport and deliver the parcels via flights from Hong Kong to other countries. The new 10-times weekly round-trip flights mark Hangzhou airport's first international air express cargo connection.

DHL says the new flights and 24-hour clearance service provided by Hangzhou Customs will allow its customers in the Yangtze River Delta and Shandong Province to enjoy later pick-up times and earlier deliveries for their shipments. The pick-up cut-off time will be five hours later on average in Zhejiang Province and three hours later in Shandong Province.

Previously international express parcels from Zhejiang Province had to be transported via Shanghai. Due to the long hours spent on road between Zhejiang and Shanghai, customers needed to drop the parcels before noon to achieve next-business-day delivery in the Asia-Pacific region and to other countries such as the United States.

"Zhejiang Province is a major driving force behind the economic development in China. It is very important for us to better serve the customers in this region," says Wu Dongming, managing director of DHL-Sinotrans.

DHL-Sinotrans is a 50-50 joint venture between DHL and China National Foreign Trade Transportation (Group) Corp (Sinotrans). Over the past 21 years, DHL-Sinotrans has developed the largest air express services network in China.

The new service is expected to benefit companies producing high-value IT and pharmaceutical products in Zhejiang. It will also help some mechanical and electrical firms and textile enterprises that need to frequently mail product samples abroad.

"It would be more convenient for companies located near Hangzhou since Hangzhou is much more geographically near than Shanghai," says Hill Zhu, shipping section supervisor of Gigabyte Technology's Ningbo factory. Taiwan-based Gigabyte Technology is one of the world's largest motherboard manufacturers.

It takes about five hours to drive from Ningbo to Shanghai Pudong International Airport, while the distance between Ningbo and Hangzhou is only about two and a half hours.

"The market demand for the new service has far exceeded our expectations," Wu says.

The flight is operated by Yangtze River Express, the cargo unit of Hainan Airlines, using a Boeing B737-300 freighter with a payload capacity of 13 tons. The average payload of the flight has exceeded nine tons, nearly one-third of which comes from Ningbo, according to local media reports in Hangzhou.

"Hangzhou could share some pressure with Shanghai. As a busy cargo transport center, Shanghai faces lots of new challenges, including heavy traffic to the airport and new demand for improved cargo handling efficiency," says Li Lei, an aviation analyst from CITICS China Securities.

The Yangtze River Delta has been an economic powerhouse of China, contributing about one-third of the country's exports. Zhejiang Province is the region's growth engine. The province's export volume exceeded $100 billion last year, rising 31 percent over the previous year. About one-third of the cargo exported via Shanghai comes from Zhejiang, local media reports say.

Driven by strong cargo transportation demand, Hangzhou airport has been trying to become "more international". With the Hong Kong Airport Authority agreeing to buy 35 percent of its shares at the end of 2005, Hangzhou airport has started an expansion project costing 12.5 billion yuan.

The project will allow the airport to double in size and build a second runway. Its annual cargo handling capacity will reach 500,000 tons, more than double the current capacity. Korean Air and Malaysia Airlines have launched scheduled cargo flights from Hangzhou to Seoul, Kuala Lumpur, Dubai and Amsterdam.

US express delivery giant FedEx set up its China regional hub in Hangzhou in March to carry out its domestic service. The company said Hangzhou offers "the right combination" of air traffic capacity, reasonable operating costs, a central geographic location and a future customer base.

Will Hangzhou challenge Shanghai's position as a major cargo gateway to China?

Analysts say it would get the "overflow" of Shanghai's traffic. But it still has a long way to catch up with Shanghai in terms of flight networks, frequencies and services.

"The new service in Hangzhou will not affect our commitment to Shanghai," says Jerry Hsu, DHL Express' Greater China president.

DHL is considering setting up a North Asia hub either in Shanghai or Seoul.