Competition among logistics companies is shifting from the ground to the skies.

Over the past few years, major airlines such as Air China, China Southern Airlines, and China Eastern Airlines have successively completed mixed‑ownership reforms, spinning off their cargo operations to establish new companies. The underlying objective is to go beyond providing general‑purpose freight services and instead focus on deploying dedicated freighter capacity to serve high‑end manufacturing, cross‑border e‑commerce, and fresh‑produce cold‑chain markets.

Meanwhile, after reaching a scale bottleneck, the leading players in the express delivery industry, in order to break free from homogeneous competition, have turned to Cainiao, SF Express, JD Logistics, YTO, and… Companies such as EMS and ZTO are accelerating their expansion into the aviation sector by expanding their fleets, building airports, and pursuing mergers and acquisitions.

As can be seen, industry giants are converging on new markets, systematically seizing opportunities arising from industrial upgrading, consumption upgrading, and the emergence of incremental growth drivers.

Airline spin-off, a cash cow IPO

Since China Eastern Logistics has… Following their independent IPOs in 2021, China Cargo Airlines and China Southern Airlines Logistics both announced significant capital‑raising moves in the first half of this year.

In early April, China Cargo Airlines updated its prospectus; by late May, China Southern Airlines issued an announcement approving the spin-off and listing of its subsidiary, China Southern Logistics. With this development, the mixed‑ownership reform of the three major airlines’ logistics divisions has gained momentum, and all three are expected to list on the A‑share market within the year.

In fact, from Starting in 2016, the three major players began gradually implementing mixed‑ownership reforms in their freight‑transportation divisions, laying the groundwork for eventual independent listings. Along the way, they successively brought in companies from the logistics sector. For example, Among the shareholders of China Cargo Airlines are Cainiao and Shenzhen International; among the shareholders of China Southern Airlines Logistics are Sinotrans and Prologis; and among the shareholders of China Eastern Airlines Logistics are Debon and Prologis.

■ Judging from the timing of the major airlines’ strategic deployments in their cargo operations, Around 2002 marked the stage of specialized division of labor. At that time, Air China, China Southern Airlines, and China Eastern Airlines each established cargo divisions, leveraging their belly‑hold capacity to provide logistics and transportation services.

Around 2007, the industry entered a phase of rapid specialization. As domestic express delivery companies pursued differentiated growth, airline cargo divisions began upgrading their logistics services, moving from general‑cargo transportation to time‑critical express offerings.

Around 2012, the industry entered a phase of vertical integration, with airline cargo divisions gradually embarking on a path of vertical specialization. As sectors such as 3C electronics, biopharmaceuticals, cold-chain logistics, and cross-border e‑commerce experienced rapid growth, they each developed tailored solutions targeting specific sub‑segments within their respective industries.

As can be seen, the positioning of the airline cargo segment is becoming increasingly clear. Ultimately, these are reflected in the prospectus and financial reports as three major business segments: air cargo services, airport cargo terminal services, and integrated logistics solutions.

According to the publicly disclosed financial reports, the three major players’ freight‑related revenue stands at… In 2022, all of them reached the RMB 20 billion level, accounting for between 20% and 50% of airlines’ total revenue. The cargo segment has been a key driver of revenue for major airlines over the past few years.

However, revenue from the cargo business is secondary; the most impressive performance lies in the fact that, over the past few years, the cargo segment has consistently contributed to the airline each year. Operating profit of RMB 2 to 5 billion.

It should be noted that over the past three years, the combined losses of the Big Three have exceeded 200 billion yuan, equivalent to the total profits it has earned over the past decade and a half. By way of such a comparison, Freight operations have firmly established themselves as the airline’s… “Profit cow.”

■ From the perspective of capacity assets, the three major players currently rely primarily on passenger aircraft belly holds, supplemented by dedicated freighters, and are gradually expanding their dedicated freighter fleets.

At present, the all-cargo fleet of Air China Cargo stands at With 15 aircraft, China Eastern Logistics’ all-cargo fleet stands at 15 planes, while China Southern Logistics has expanded its fleet to 17 aircraft this year following the successive introduction of new freighters.

The expansion of transport capacity has been underpinned by the steady growth of business scale. Over the past few years, the three major players have maintained cargo volumes above one million tons. With… According to 2022 data, the cargo volumes of Air China Cargo, China Eastern Logistics, and China Southern Logistics were 991,100 tons, 1,326,500 tons, and 1,143,100 tons, respectively.

Outstanding performance across key metrics—including revenue scale, operational size, profitability, and high growth—indicates that airlines’ cargo divisions are increasingly well-positioned for sustainable, healthy growth.

In-house delivery system, with a strong push for product upgrades.

Of course, in addition to airlines spinning off their cargo operations to run them independently, express delivery companies, once they reach a certain scale, have also begun to build their own fleets and airports.

Recently, the Hunan Provincial Department of Commerce reported that the Provincial Port Office convened a coordination meeting to conduct a focused review of progress on the joint venture between ZTO Express and Hunan Airlines to establish a cargo airline.

This means that, following SF Express, JD.com, and YTO, ZTO is also set to build an airport.

At present, SF Express is the first private‑sector express delivery company to build its own airport and fleet. By partnering with Ezhou, Hubei, it has established China’s first dedicated cargo airport. — At Hualu Airport, the all-cargo fleet has grown to 81 aircraft;

Yuantong has signed a strategic investment agreement with the Jiaxing Municipal Government of Zhejiang Province to build a global air logistics hub at Jiaxing Airport. Currently, its fleet size stands at… 13 aircraft; JD Logistics has signed a strategic cooperation framework agreement with the Nantong Municipal Government, aiming to develop Nantong Airport into JD Logistics’ global air cargo hub. Currently, its fleet size stands at… Four aircraft; China Postal Airlines’ fleet comprises 31 aircraft.

In the past, speed was the defining hallmark of SF Express’s operations in the aviation sector. Today, with an increasing number of players entering the market, they are seeking to emulate SF’s model and blur the line between economy‑class and business‑class express delivery.

The underlying driver is that leading express delivery companies are seeking new sources of profit within the framework of economies of scale.

On the one hand, amid homogeneous competition, companies inevitably find themselves trapped in a vicious cycle of rising revenues but stagnant or declining profits.

Currently, mainstream express delivery companies have all reached an annual volume of over 10 billion parcels. Even with such scale, Best Express and STO Express have been operating at a loss in recent years, particularly as they face intensified price competition driven by the disruptive entry of J&T Express. Ultimately, Best Express’s domestic operations opted to… “Selling out” to J&T Express, Shentong Express “sells out” to Alibaba.

On the other hand, budget‑friendly express delivery services have entered the core markets of SF Express and JD Logistics.

Driven by economies of scale, low-cost express delivery services are gradually narrowing the time‑to‑delivery gap with SF Express and JD Logistics, while the transit times for standard products have largely stabilized at… Within 72 hours. Building on this, players led by STO Express have begun collaborating with Cainiao to leverage its warehouse network, further enhancing delivery speed in key economic hubs.

In the course of this process, it becomes clear that in SF Express’s aggressive push into the economy‑class delivery segment, its massive investments failed to build a robust network; instead, they weighed down the core business, pushing it into a razor‑thin profit margin. Ultimately, SF Express opted to… “Cutting off an arm to save the body,” it focused on its core business and sold Fengnet to J&T Express.

Meanwhile, economy‑class express carriers like ZTO, leveraging economies of scale and a tiered product strategy, are pushing upward to overtake their competitors in profitability.

In this comparison, it can be observed that, In the “price war,” express delivery companies have been competing on cost efficiency; now, air freight is emerging as the decisive battleground for service differentiation.

Accordingly, following SF Express’s completion of China’s first dedicated cargo airport, JD.com, YTO, ZTO, and other players have successively elevated the development of airports and the expansion of their air fleets to key strategic priorities.

Especially ZTO Express. In 2018, ZTO Express established Xinglian Airlines to develop its air cargo business, initially adopting a model centered on partnerships with airlines. Now, it is also set to embark on the path of building its own airport.

Of course, express delivery companies’ new sources of profit extend beyond time‑sensitive services.

Cross-border business is the main growth driver.

Beyond time‑based tiering, air cargo holds untapped potential for new growth.

According to the financial reports and prospectuses of several major airlines’ logistics divisions, The air cargo segment comprises three primary business lines: express and expedited freight, cross-border e‑commerce, and high-end niche markets.

The express and courier business primarily provides traditional air freight forwarding services to industry peers such as postal services, express carriers, and air cargo agents. Cross-border operations, driven by the rapid growth of cross-border e‑commerce in recent years, have become a key engine for China’s foreign trade expansion, demonstrating strong growth potential. Meanwhile, the high-end niche segment has emerged through airlines’ vertical integration, focusing on sectors such as biopharmaceuticals, Solutions for niche markets such as 3C electronics and aerospace equipment.

In this business structure, which segment accounts for the largest share?

According to the data disclosed in China Cargo Airlines’ prospectus, over the past three years, the proportion of its international business revenue was as follows: 78.30%, 78.78%, and 83.36%—in other words, roughly 80% of the business comes from cross-border logistics.

Previously, a senior official at China Southern Airlines Logistics also noted that, driven by the global expansion of China’s high-end manufacturing and cross-border e‑commerce sectors, Chinese-made goods and products are accelerating their integration into the global supply chain, with the cross-border commerce industry serving as the most critical growth engine for air cargo.

Meanwhile, comparing the revenue per ton-kilometer of the three major carriers’ international and domestic operations, the international segment is roughly equivalent to the domestic segment. 2–3 times. With high‑frequency business scenarios, premium unit rates, and strong growth potential all converging, cross‑border e‑commerce logistics has emerged as the primary growth driver for air cargo.

However, this does not mean that cross-border operations will continue to drive rapid growth in air cargo. Over the past few years, the sector’s high profit margins have been the result of a combination of multiple factors.  

First, as domestic enterprises become increasingly active in international trade, demand for air logistics continues to grow. Second, amid the pandemic, international air capacity has fallen short of demand, driving up air logistics prices. Third, key procurement costs—such as jet fuel, aircraft, and aviation spare parts—have not risen significantly to the same extent.

Under the combined influence of several key factors, air cargo has demonstrated strong profitability.

Going forward, as market supply and demand gradually return to normal, the number of players in the air cargo sector is expected to grow, with competition likely reverting to a more conventional trajectory—perhaps even settling into a mildly competitive environment. At this stage, air cargo carriers still have considerable room for improvement in their service capabilities.

This service trend points toward extending the service chain, building end-to-end capabilities, and improving end-to-end efficiency.

In the past, air cargo carriers focused primarily on trunk‑line transportation, with limited bargaining power over upstream and downstream links in the logistics chain. As companies such as China Cargo Airlines, China Eastern Logistics, and China Southern Logistics have accelerated the transformation of their traditional freight‑forwarding businesses, they have expanded their offerings beyond conventional air transport services to encompass both ends of the aviation logistics value chain, striving to achieve end‑to‑end delivery of goods. “End-to-end” logistics, integrating and converging multiple service functions such as transportation, warehousing, last-mile delivery, and information management, is reshaping the competitive landscape—where competition is shifting from trunk‑line capacity to international, end-to-end supply chain capabilities.

At present, airports and airline fleets are becoming key leverage points for industry giants. Companies such as Cainiao and SF Express also rely on airports and overseas operations. HUB nodes are leveraged to extend end-to-end capabilities, continuously harnessing the advantages of resource integration and strengthening full‑chain control through in‑house development, acquisitions, and strategic enhancements.

Overall, the air cargo sector is attracting an increasing number of players. This segment, long associated with the high-end market, is becoming a key differentiator for logistics companies.