Shenwan Hongyuan Group Co., Ltd. has released a research report stating that in the context of global route network restructuring, Chinese cargo airlines possess distinct advantages. These include: 1) Route efficiency, as they can fly over Russian airspace, resulting in lower unit costs compared to European and American carriers that must take detours; 2) Demand strength, with China being the world's largest cross-border e-commerce exporter, providing stable underlying demand for air cargo; and 3) Capacity potential, as Chinese carriers could potentially fill the gap and increase their global market share if European and American airlines withdraw from some Europe-Asia routes due to cost pressures.

With the demand for air cargo timeliness remaining stable, air freight rates have achieved phased increases. Chinese cargo airlines, leveraging their inherent strengths, are positioned to be the primary beneficiaries of the current supply-demand mismatch in the air cargo market. The report suggests focusing on domestic air cargo carriers, with a key recommendation for Eastern Air Logistics Co.,Ltd. (SH: 601156), and also suggests monitoring Air China Cargo Co., Ltd. (SZ: 001391).

Key Analysis and Market Context

Recent data from the International Air Transport Association (IATA) for April 2026 shows global air cargo demand (CTK) increased by 4.0% year-on-year compared to April 2025, with international demand also up 4.0%. Capacity (ACTK) decreased by 0.4% year-on-year, with international capacity down 0.9%. Against the backdrop of ongoing Middle East tensions disrupting global route networks, the air cargo industry continues its steady expansion. The "demand expansion + capacity contraction" dynamic is accelerating, leading to simultaneous growth in volume and price, highlighting the sector's resilient fundamentals.

Supply Constraints Intensify as Middle East Airspace Issues Reshape Networks

The Middle East situation has disrupted operations at major hubs in the Gulf region. In April, Middle Eastern carriers saw capacity contract sharply by 22.9% year-on-year, with demand down 18.2%, marking the weakest performance globally. Cargo volumes on Europe-Middle East and Middle East-Asia routes fell by 25.9% and 22.4% year-on-year, respectively. Foreign carriers on Europe-Asia routes are forced to take longer detours to avoid Gulf airspace, increasing flight distances and reducing daily aircraft utilization. Coupled with the slow recovery of belly-hold capacity on wide-body passenger aircraft, it is difficult for global effective capacity to be replenished quickly in the short term, prolonging the supply-demand gap.

Demand Resilience Exceeds Expectations, Driving Volume and Price Growth Led by Asia-Pacific and Europe-Asia Routes

By region, Asia-Pacific carriers saw the highest growth rates globally in April, with cargo demand up 10.5% and capacity up 5.3% year-on-year. By route, Europe-Asia cargo volume increased by 16.2% year-on-year, marking 38 consecutive months of growth. Intra-Asia routes grew by 13.0% year-on-year, achieving 30 consecutive months of growth. Asia-North America routes were up 8.3% year-on-year, for six consecutive months of growth. Asia-related trade flows have become the core driver supporting global air cargo.

Air freight rate indicators also showed positive trends. In April, the Baltic Air Freight Index rose 22.6% year-on-year. The Shanghai Pudong Export Air Freight Index increased 24.8% year-on-year, and is up 16.5% since the start of the year. The Hong Kong Export Air Freight Index rose 25.4% year-on-year, up 11.8% year-to-date.

Pricing and Profit Resilience Persist Despite Cost Pressures

In April, aviation kerosene prices surged 121.1% year-on-year, while crude oil prices rose 77.7%, indicating significant cost-side pressure. However, under the "demand expansion + capacity contraction" dynamic, the global cargo load factor increased by 1.9 percentage points year-on-year to 46.0%. Freight rate levels remain elevated. Furthermore, this round of incremental volume is primarily contributed by dedicated freighters. With constrained capacity supply, the potential for rate elasticity could further increase.

Risk Factors to Consider

Key risks include macroeconomic conditions and demand growth falling short of expectations; uncertainties in international trade policies; and aviation safety, among others.