Lufthansa Cargo bolsters China partnerships as trade grows

November 6, 2024

The cargo subsidiary of Lufthansa Group is doubling down on activity in China to capitalize on the country’s growing dominance as an airfreight center for European trade thanks to a recent boom in e-commerce exports combined with its traditional role as manufacturer for the world.

Lufthansa Cargo on Wednesday announced that CEO Ashwin Bhat has reinforced partnerships with the Shanghai Airport Authority, Air China Cargo and China Postal Express & Logistics Co.

The cargo airline for 25 years has operated the Shanghai Pudong International Airport Cargo Terminal Co. (PACTL) in a joint venture with the Shanghai Airport Authority, a state-owned enterprise of the city that operates Pudong airport and JHJ Logistics Management Co. The facility provides warehousing, customs clearance, consolidation, and loading and unloading services for Lufthansa Cargo and other airlines. PACTL last year handled more than 1.6 million tons of cargo.

Shanghai is Lufthansa Cargo’s biggest air hub after Frankfurt, Germany.

Lufthansa Cargo operates 11 Boeing 777 long-haul cargo jets and four Airbus A321 converted freighters in regional service. An additional six aircraft are chartered from AeroLogic, a joint venture with DHL, and operated by AeroLogic on behalf of Lufthansa Cargo. Lufthansa Cargo also manages the belly cargo for Lufthansa Group’s passenger airlines besides Swiss International. It has multiple cargo routes connecting cities in China and its Frankfurt hub, including ones from Zhengzhou and Shenzhen that were established this year.

The memorandum of understanding between the Shanghai airport authority and Lufthansa Cargo calls for the parties to increase Pudong airport’s international competitiveness by further enhancing operational efficiencies, sustainability initiatives and customer service, including through the digital integration of China and German customs authorities.

Lufthansa Cargo has operated regular cargo flights for China Post Group from Shanghai to Frankfurt since 2018. China Post’s logistics arm provides domestic and international express delivery and contract logistics services. A news release didn’t provide details about how the partnership has expanded, but one possibility is Lufthansa operating more dedicated frequencies for the postal service.

Air China Cargo owns nine B777 freighters and three Boeing B747-400 freighters and handles cargo moving in the lower deck of Air China passenger aircraft.

PACTL 25th anniversary

Last month, PACTL issued a five-year strategy aimed at strengthening its competitiveness. It operates five cargo terminals, including specialized temperature-controlled and e-commerce facilities, at Shanghai’s two major airports. Since its founding 25 years ago, it has expanded services across southern China, supporting more than 70 airlines and 300 forwardings. PACTL’s trucking network spans the country.

PACTL’s focus areas include strengthening safety management and improving efficiency. The terminal said it will expand the number of supervisors on the ramp to better coordinate pallet traffic, integrate decision-making tools in its cargo management platform and expand its network of remote terminals to better serve the Yangtze River Delta region.

The ground handling company is also testing unmanned warehouse storage using AI-driven applications, accelerating upgrades at PACTL West and participating in the development of new facilities at Shanghai’s two airports.

Lufthansa Cargo saw cargo revenues increase 16% to $789 million during the third quarter. It has shifted capacity from the trans-Atlantic to the Asia-Pacific region to capitalize on strong trade flows from there to Europe and North America, especially for e-commerce shipments. And late last month it launched trans-Pacific service from Vietnam to the United States.

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Write to Eric Kulisch at ekulisch@freightwaves.com.