The agreement establishes a cargo transportation network to deliver e-commerce products arriving from China to European customers.
STO Express will operate scheduled cargo flights to Budapest Airport, which is likely to generate a significant increase not only in total cargo traffic, but also in the field of e-commerce, the main profile of the Chinese company.
The agreement was signed during the annual conference of the ’16+1 cooperation’ initiative, comprising China and 16 countries from the Central and Eastern European (CEE) region, which got under way this week in Budapest.
At the economic, commercial and financial forum organised as part of the conference, STO Express announced that, in line with the efforts of the Chinese government, it is developing its relations with the Central and Eastern Europe (CEE) region.
As part of this, it has designated Budapest Airport as its preferred hub for air cargo transportation.
STO Express’ first B747 cargo aircraft, filled primarily with e-commerce goods, arrived in the Hungarian capital in November, in the colours of Silkway Italia, initially as a charter flight.
Cargo traffic at Budapest Airport has increased by 36 per cent since December 2015. From January to October 2017, Budapest Airport handled a record of 103,800 tonnes of air cargo, up 14.5 per cent on the same period last year. Budapest has a balanced market share with exports at 52 per cent, and imports at 48 per cent.
The cooperation agreement was signed on behalf of Budapest Airport by Rene Droese, director Property and Cargo, who welcomed the initiative by STO Express. “Export-import between China and Hungary, and the entire CEE region, plays an important role in our rapidly developing market,” he said.
“We believe that Budapest and Budapest Airport provide the best place for distribution by STO Express in the CEE region, and we will do our best to prove this in the near future. Our new air cargo base, Cargo City, will commence operations in the summer of 2019.
Droese noted that, based on market data, e-commerce accounted for 4-5 per cent of retail sales in Hungary this year, with 20 per cent growth in this segment from January to June, compared to the same period last year.
This means online transactions of approximately USD600 million during the first half of 2017, he said. “E-commerce is thus clearly one of the areas with the greatest potential in the market, including air cargo,” Droese added.
In August, STO Express, one of China’s largest delivery companies, said it would increase its investment in Chinese domestic courier Fast Express by 133 million yuan (USD19.8 million), according to a filing to the Shenzhen Stock Exchange. After the new investment, Shenzhen-listed STO will hold a 10 per cent stake in Shanghai-based Fast Express, becoming its third largest shareholder after the reinvestment.
Fast Express operates delivery networks in most major mainland Chinese cities and also offers service in Hong Kong, Macau and Taiwan.
China has remained the world largest market for the express courier business since 2014, driven by the popularity of e-commerce in the world most populous country. In the second quarter of this year, an average of 100 million parcels were delivered every day.