According to Zhitong Finance APP, Guolian has released a Research Report stating that this year the development of Air Transportation in China has been good, with international Air Transportation maintaining a rapid growth trend. Leading enterprises with core Air Transportation capacity resources benefit from the domestic cross-border e-commerce platforms’ overseas demand and industry capacity supply constraints. The supply-demand balance of cross-border Air Transportation is expected to remain tight. From the perspective of compound growth rate, the global Air Transportation industry supply-demand gap from 2023 to 2027 is 1.7%. Therefore, continue to be Bullish on the cross-border Air Transportation industry.

Event: From January to October 2024, international routes completed 2.932 million tons, a significant increase of 48.5% compared to the same period in 2019. Meanwhile, international freight flights remain at a high running level. From January to October 2024, civil aviation international freight flights averaged 376 per day, an increase of 80.8% compared to the same period in 2019.

Guolian Securities' main points are as follows:

Demand Outlook: Cross-border e-commerce drives growth in Air Transportation volume.

Cross-border e-commerce continues to accelerate, which is expected to drive an increase in Air Transportation volume. Historically, the growth rate of Air Transportation volume has been consistent with global trade growth, and the rapid development of cross-border e-commerce has become a new driving force for Air demand growth. According to preliminary estimates by the General Administration of Customs, in the first three quarters of 2024, China's cross-border e-commerce import and export reached 1.88 trillion yuan, a year-on-year increase of 11.5%, higher than the overall foreign trade growth rate of 6.2 percentage points during the same period.

According to data from Adobe Analytics, online sales in the USA during the 2024 'Black Friday' reached a record high of 10.8 billion USD, a year-on-year increase of 10.2%. Frost & Sullivan expects that from 2023 to 2027, the global B2C e-commerce GMV compound growth rate will be 10.2%. Meanwhile, IATA expects that by 2027, e-commerce parcels will account for 30% of Air cargo volume. The institution expects that from 2023 to 2027, the global Air Transportation volume compound growth rate will be 3.2%.

Supply Outlook: The capacity of freighters limits the speed of capacity expansion.

The capacity of freighters is constrained, with new capacity maintaining low growth. Since 2024, Boeing's supply chain has continuously faced issues, leading to freighter deliveries falling below expectations. From January to November 2024, Boeing delivered only 22 freighters, a year-on-year decrease of 42.1%, accounting for 6.9% of Boeing's total aircraft deliveries. Looking at the orders on hand, the number of undelivered freighters from Boeing is 104, representing 4.4% of the global freighter fleet in 2023. Assuming 24 freighters are delivered in 2024, and the capacity recovery rates for Boeing freighters from 2025 to 2027 are 60%/80%/100%, and that there are no retirements of freighters or conversions of passenger planes to freighters, and Airbus A350F delivers 12 units in 2027, it is estimated that the compound annual growth rate of the global freighter fleet from 2023 to 2027 will be 1.5%.

Rate Outlook: Supply constraints are expected to raise the price center in the medium term.

From a short-term trend perspective, the freight rates for the 2024 peak season are showing moderate performance. According to Xenata data, global air freight spot prices have risen by 12% from early September (the start of the peak season) to December 1st this year, while they rose by 25% during the same period last year.

According to TAC data, in November 2024, air freight rates from Hong Kong to North America/Europe increased by 0.8%/14.0% year-on-year. From a long-term perspective, the current seasonal lowest rates in the 2023-2024 period are also generally higher than the highest peak rates before the pandemic. According to WorldACD data, air freight rates during the lowest points in 2023-2024 are also higher than the peak rates before 2020. In the future, the industry's supply growth rate is expected to be less than the demand growth rate, meaning that peak season rates may exhibit unexpected upward flexibility.

Investment Recommendation: Pay attention to leading companies that control core air transportation resources benefiting from the demand generated by domestic cross-border e-commerce platforms and industry supply constraints; the supply and demand for cross-border air transportation are expected to maintain a tight balance.

The analysis estimates that, from the perspective of compound growth rate, the supply-demand gap in the global air freight industry from 2023 to 2027 is 1.7%. Therefore, the outlook remains bullish on the cross-border air transportation industry, recommending leading companies like Eastern Airlines Logistics (601156.SH) that possess core air transportation capacity resources; and suggesting to focus on global air freight forwarding leaders such as Sinotrans Limited (00598,601598.SH).

Risk Warning: Global economic recovery may be weaker than expected; foreign countries may implement restrictive policies against Chinese cross-border e-commerce platforms; the new supply of freighter capacity may exceed expectations.