As revealed by Tao Jun, marketing director of China Cargo Airlines (CK) - a subsidiary of China Eastern Airlines (MU), domestic firms that offer international cargo transportation services are generally under losses.

It is reported that China's air cargo volume was 5.5275 million tons last year, which declined 1.8% year on year. In the first 4 months of this year, the cargo volume declined 7.3% year on year to 1.646 million tons. In 2011, China Cargo Airlines had net loss of 370 million yuan, while Air China (CA)'s subsidiary - Air China Cargo had net loss of 920 million yuan.

Mr. Tao has concluded that overcapacity is one of the reasons that cause loss, "Since the signing of air transport agreement between China and U.S. and the liberalization of air traffic rights from 2004, the international logistic giants have entered into Chinese market to seize market share, which leads to overcapacity and pulls down the price."

In addition, the imbalance in the inbound and outbound volume of cargo is a reason as well. "The load factor of outbound flights is approximate 92%, while that of inbound flights only reaches 50%."

Yang Shengfu, vice president of China Communications and Transportation Association, pointed out that, by comparing to foreign rivals, the Chinese aviation logistic industry is still under the preliminary stage of "air transportation", and there is no company can be defined as logistic company currently. International aviation logistic giants, such as UPS, DHL, not only provide air transportation, but also provide supplementary services, such as "door to door" express service which have high added value.

Mr. Yang added, the supply chain of airfreight should be transformed from single transportation to the integration of transport, storage, handling, processing, sorting and distribution. Some foreign firms have established ground logistic system in China, and set hub in main airports. The Chinese firms have been making transition in their supply chain as well, for example, Hainan Airlines (HU) has acquired Tiantian Express, and China Southern (CZ) has cooperated with ZJS Express and YTO Express.