By Peter A. Buxbaum, AJOTA civil aviation agreement reached in late May between the United States and China contained two important elements that will impact cargo shippers and carriers. The agreement called for more than doubling the number of daily passenger flights between the two countries by 2012. In addition, the agreement provided air cargo companies expanded commercial freedom by 2011. The agreement was signed by US Secretary of Transportation Mary Peters and Chinese Minister of Civil Aviation Yang Yuanyuan. The agreement will allow thirteen new daily flights operated by US carriers to and from China within five years, beginning this year. One new daily flight will be added in both 2007 and 2008, four new daily flights in 2009, three in 2010, and two in 2011 and 2012, for a total of 23 per day. Under the current agreement, US airlines today can operate only ten daily flights into Beijing, Shanghai, and Guangzhou. The agreement will also allow the US to designate three additional US carriers to operate to China; one in 2007 and two in 2009. The deal also lifts limits set by the Chinese government on the number of cargo flights and cargo carriers serving the two countries by 2011, providing US cargo carriers with nearly unfettered access to Chinese markets. The civil aviation agreement dramatically expands capacity in US-China trade lanes over the next six years. This development should provide advantages to US and Chinese shippers and forwarders. According to one industry expert however, carriers ought to proceed with caution. “It’s not an open skies agreement, but it effectively provides open skies for cargo carriers by 2011,” said Brian Gillen, vice president for international sales at Pilot Air, a logistics company based in Lima, PA. “Open skies means unlimited access to the market in China.” Pilot Air moves customer cargo from thirteen ports in China and Hong Kong into the United States. Most of its volume involves air freight, but the company also provides ocean services. Pilot mostly handles consumer goods, electronics and high tech products, raw materials, and finished products coming into West Coast ports. Polar Air, American Airlines, and Continental Airlines are among the carriers currently operating freighter flights to and from the United States and China. Shanghai, Beijing, and Hong Kong are the primary cities served by those carriers. Among the new passenger airlines to be operating to China, “It looks like Delta is a shoo-in for an Atlanta-to-Shanghai route next year,” Gillen said. “United will get a flight to Guangzhou, in southern China, and USAir will also probably get the nod for a route to Beijing.” Gillen noted that the three new routes are regionally distributed, with Beijing in the north, Shanghai in the central part of the country and Guangzhou in the south. Guangzhou, Gillen commented, is within easy reach of Hong Kong by road. More capacity to lessen peak season woesThe new civil aviation agreement “will dramatically increase capacity” in US-China trade routes, according to Gillen. “Every year we run into the peak season that generally starts in the late summer,” he said. “It is increasingly difficult to find space, and as a result it becomes more expensive. By having open skies for cargo carriers, existing cargo carriers will expand their services and new ones will be coming into the market. More capacity will take the pressure off of peak-season shipping and will reduce its costs.” Gillen believes the agreement will improve trade between the United States and China and that it presents a solid opportunity for exporters from the United States to China. “China is becoming more westernized,” he said. “As the economy opens up, they want more goods from the United States.” Exporters of fashion and building equipment are among those who could benefit from that trend, according to Gillen. Satish Jindel, a Pittsburgh-based transportation consultant, agreed with Gillen that the civil aviation agreement could provide opportun