China Eastern Airlines Logistics Starts Again

On June 11, China Eastern logistics (601156. SH) opened again and was closed on the trading limit board, with a closing price of 27.48 yuan and a market value of 43.6 billion yuan.

On June 9, two days ago, China Eastern Airlines Logistics Co., Ltd. was listed on the Shanghai Stock Exchange at a price of 15.77 yuan. On the first day of listing, it was up to 22.71 yuan per share, up 44.01%. On June 10, China Eastern logistics opened trading at 24.98 yuan / share.

The listing of China Eastern Airlines logistics has made it the first share of aviation mixed reform. In 2016, China Eastern Airlines logistics was approved as one of the first batch of mixed transformation pilot enterprises in China, and also the first mixed transformation enterprise in the field of civil aviation.

Before its listing, 21st century economic reporter visited the company and had a four hour in-depth exchange with its senior management to deeply understand its mixed reform experience and business model changes“ Our competitors are not domestic express companies, but FedEx and UPS. " Li Jiupeng, general manager of China Eastern logistics, told reporters that the company is facing the future to lay out new business models, in order to win the market and future after the epidemic.

China Eastern logistics is focusing on the development of multimodal transport and warehousing business- Materials and pictures

Past and present

China Cargo Airlines (hereinafter referred to as "China Cargo") is the first airline specialized in cargo and mail transportation in China. Founded in 1998. At that time, the freight transport capacity was in short supply, so the market did not need to go to the market, and the market took the initiative to come to the door. Therefore, from 1998 to 2004, cargo airlines experienced a wonderful 7-year profit period. However, since 2004, the market has changed dramatically, and China Cargo Airlines has entered the stage of nine losses in ten years.

Why do we lose money“ The supply and demand markets have changed. " At that time, old staff of China Cargo Airlines recalled that in addition to China cargo airlines established by China Eastern Airlines, Air China and China Southern Airlines also successively established China International Cargo Airlines (hereinafter referred to as "Air China Cargo") and China Southern Airlines Cargo Department. Four express giants FedEx, UPS, DHL and TNT have also entered the Chinese market. In addition, with the rapid development of civil aviation in China, the passenger transport system has also achieved rapid development, There is a large supply of belly cabins for airliners. At the same time, the supply system of freight has not developed at the same time, and the growth of demand side can not catch up with the supply of transport capacity. Therefore, the supply of freight aviation capacity has become rampant. In order to seize market share, each company is willing to sacrifice price war, which leads to low freight rates. From 2004 to 2013, there were nine years of losses in ten years. When the loss was the largest, the asset liability ratio of China Cargo Airlines exceeded 130%, which was seriously insolvent.

In addition to external market factors, there are also internal reasons for such a serious loss. Stimulated by the early prosperity of the market, China Cargo Airlines continuously introduced aircraft to increase its transport capacity, with a peak of 20 full cargo aircraft, including five types of aircraft and six kinds of engines. Different aircraft have different flight distances, different pilots and different spare parts. Finally, the company's operating costs are very high. Once the market demand fails to keep up, losses are inevitable.

At that time, not only China Cargo Airlines was in trouble, but China Cargo Airlines and China Southern Airlines Cargo Department were in a long-term loss mire.

"The loss of air cargo is not a simple problem of scale effect, but more of a business model." In 2013, Liu Shaoyong, chairman of China Eastern Airlines Group, pointed out that, unlike FedEx, SF express and other express companies, the freight companies of China Eastern Airlines have the capacity first and then look for cargo. In order to change the air cargo loss, it is necessary to reduce the freight fleet to cope with the changes in market demand, focus on promoting the transformation of the logistics sector, developing logistics integrators, logistics integrators, and so on Express business and other business modules of the core business.

Therefore, in 2013, China Eastern Airlines logistics was formally established, and China Cargo Airlines, China Eastern Airlines ground transportation companies, and China Eastern express companies were integrated together. As a result, China Eastern logistics officially entered the stage of reform.

In fact, if it did not change at that time, China Eastern logistics was also in danger. In November 2013, the Third Plenary Session of the 18th CPC Central Committee passed the "decision of the CPC Central Committee on several major issues of comprehensively deepening reform", promoting a new round of state-owned enterprise reform, and shutting down and transferring zombie enterprises under central enterprises on a large scale. China Eastern Airlines logistics time is only three years, if it can not turn around, it will be listed as Zombie enterprises to deal with.

As a result, China Eastern logistics began to break its arms to survive. Its transport capacity was cut by more than half from 20 to 8. The fleet became only 747 and 777 aircraft, and its personnel were greatly reduced. Finally, it barely made a profit in 2014. In the following two years, relying on its meager profits, it substantially reduced its debt ratio and walked out of the shadow of zombie enterprises.

However, China Eastern Airlines realized that the scale and profit of air cargo were too thin at that time, and further reform was needed to achieve great development.

Time is also good.

In 2016, the national development and Reform Commission and the state owned assets supervision and Administration Commission (SASAC) promoted pilot mixed ownership reform in some important fields. It is planned to select seven enterprises or projects in the fields of electric power, oil, natural gas, railway, civil aviation, telecommunications and military industry to carry out the first batch of pilot mixed ownership reform. China Eastern Airlines logistics has won the first pilot qualification in the field of civil aviation.

In fact, at that time, all three major airlines were interested in participating in the pilot project. Why does China Eastern logistics run faster?

According to the reporter of the 21st century economic report, China Eastern Airlines Group has actually been preparing deep-seated reform measures of China Eastern Airlines logistics two years ago. As soon as the state wants to solicit the pilot of mixed reform, the group management immediately requests China Eastern Airlines logistics to supplement and adjust the reform plan, which is reported to China Eastern Airlines Group for approval, and then reported to the national development and Reform Commission as soon as possible, It can be regarded as the fastest central enterprise to hand over the mixed reform scheme, and China Eastern logistics has taken the first batch of "free ride" of mixed reform.

Pioneer of mixed reform

After the approval of the mixed reform scheme, China Eastern logistics quickly took action, carried out business restructuring, and then introduced strategic investors.

On the morning of June 19, 2017, the signing ceremony of China Eastern Airlines logistics mixed reform agreement was held in Shanghai, and all six shareholders appeared. In this mixed reform scheme, China Eastern Airlines Group gave up holding absolute control, with only 45% of the shares, while the other 55% were distributed in Lenovo holdings, Greenland Group, global and deppon logistics, of which deppon took 5% of the shares, which was equal to that of global.

Among the new strategic investors, Lenovo holdings holds the largest proportion of shares. Lenovo holdings and its Junlian capital hold 25% of the total shares, becoming the second largest shareholder of China Eastern Airlines logistics. Compared with the strategic partners chosen by China cargo and China Southern Airlines in the following two or three years, it seems that the second largest shareholder of China Eastern logistics can not directly enhance its cargo source and network. Why did you choose Lenovo?

"Complementary marriage can go far." Li Jiupeng explained to the 21st century economic reporter that after the news of mixed reform went out, many companies came to visit, most of them financial investors. However, China Eastern logistics has always been very clear that what it wants is to help it carry out in-depth reform of its system and mechanism, and form complementary strategic investors in its business. On the one hand, Lenovo has also had the experience of state-owned enterprise reform, and relevant experience can be shared. In addition, many enterprises in the investment territory of Lenovo holdings can form a complementary relationship with China Eastern logistics. For example, xinrongmao, jiawo group, etc., whose agricultural transport demand fully matches the cold chain business of China Eastern Airlines logistics. Li Jiupeng revealed that if the epidemic had not happened, the salmon invested by jiawo in Chile would have been able to fly back home on the cargo plane of China Eastern Airlines logistics, creating another story of "salmon freedom".

As for the entrance of another strategic investor, prosper will help China Eastern logistics improve its warehousing and supply chain management system and help it open up a business different from other air cargo companies, that is, extending Logistics Industrial Park business from ground integrated services. It is reported that the first logistics industrial park of China Eastern Airlines will be located in Xianyang, which will be started at the end of the year and completed in June next year. Later, it will be spread out in several places in China. There is also a strategic investor, deppon logistics, to help China Eastern logistics in the distribution of terminal outlets, to achieve the service demand from point to point, door to door.

It can be said that there are potential business cooperation opportunities between the non-state-owned investors introduced through the mixed reform and the main aviation logistics industry of China Eastern Airlines. Through the business integration of the whole industry chain of state-owned and non-state-owned aviation logistics, China Eastern logistics will further help build an aviation logistics industry ecosystem. In terms of business collaboration and cooperation, China Eastern logistics can carry out in-depth strategic cooperation and business cooperation of "capital + industry" with deppon, Lenovo holdings and Beijing Junlian in logistics transportation, logistics warehousing and logistics industry ecosystem construction.

More importantly, China Eastern Airlines logistics has also achieved important changes in the system and mechanism through the mixed reform. It has improved the corporate governance structure, promoted the construction of modern enterprise system, greatly improved the operation efficiency, stimulated the internal vitality of the enterprise, and established a market-oriented salary management system, and established and improved the medium-term and long-term incentive mechanism through employee stock ownership.

In particular, the "de Ma Jia" and the management's shareholding are more thorough reform measures in the mixed reform. The so-called debar is to terminate the labor contract with China Eastern Airlines and sign a market-oriented labor contract with China Eastern Airlines logistics. In the process of implementation, it is inevitable to be accompanied by arguments and the departure of some employees. If the management wants to invest in the stock, it must not be in vain. If the management wants to invest in the stock, it must be able to advance and retreat together with the enterprise.

(SOE reform) can be more or less, can be in and out is very simple, the most difficult is to be able to go up and down. " Li Jiupeng lamented that many of the old colleagues of China Eastern Airlines took off their waistcoats to work in the logistics of China Eastern Airlines. Each of them signed three contracts: the labor contract, the employment letter and the performance of that year. There is no longer the previous hierarchy of China Eastern Airlines, one person, one post. It is through these reform measures under the market mechanism that China Eastern logistics has solved some problems in the past.

At the same time of system and mechanism reform, the asset scale and performance of China Eastern logistics have also been growing rapidly. According to the information in the prospectus of China Eastern Airlines logistics, the total assets of China Eastern logistics in the three years from 2018 to 2020 are 57882.4 billion yuan, 6.4275.5 billion yuan and 9.096.21 billion yuan respectively. The operating revenue increased from 1088583 million yuan in 2018 to 151106.9 billion yuan in 2020, with a compound annual growth rate of 17.82%. Net profit increased from RMB 1193.2 billion in 2018 to RMB 27235 million in 2020, with a compound annual growth rate of 56.69%.

3.0 business model

If the business model of China Eastern logistics before 2014 is to turn losses into profits, and 2014-2020 is to solve the problem of continuous profit, then after listing, China Eastern logistics thinks about how to win the future.

According to the prospectus of China Eastern logistics, its main business is air express, ground integrated services and integrated logistics solutions. Air express includes all cargo transport, abdominal cabin transport / passenger cargo business; Ground integrated services include freight station operation, multimodal transportation and warehousing business; Integrated logistics solutions include cross-border e-commerce solutions, peer project supply chain, aviation special cargo solutions and origin direct solutions. Among them, air express and ground integrated services are the traditional advantages of general air cargo companies. At present, 2 / 3 of the revenue of China Eastern Airlines logistics also comes from this.

By the end of 2020, China cargo, a subsidiary of China Eastern Airlines logistics, has cargo resources of 10 cargo planes and 725 passenger planes. Relying on SkyTeam alliance, code sharing and Spa agreement, its route network can reach 1036 destinations in 170 countries around the world. China Eastern logistics has 17 self operated cargo terminals nationwide, covering 7 self operated cargo terminals in Shanghai, and 10 foreign self operated cargo terminals in Beijing, Kunming, Xi'an, Wuhan, Nanjing, Jinan, Qingdao, Lanzhou, Hefei and Taiyuan.

But China Eastern logistics is obviously not satisfied with these traditional businesses. China Eastern logistics executives told the 21st century economic report that in the ground integrated service business, the company focuses on the development of multimodal transport and warehousing business, including the construction of a new logistics park. The first logistics park located in Xi'an airport will start construction this year, and then it will be spread in many places in China.

Another layout that focuses on the future is integrated logistics solutions. It is understood that China Eastern Airlines logistics has the core resources of air freight transport capacity, and the upstream and downstream service chain has been gradually opened up. In view of the limited air transportation resources of participants in express delivery, express transportation and express mail industry, it provides peer project supply chain business. Under the influence of the epidemic situation in 2020, the air freight transportation price will rise sharply, which will promote the rapid expansion of the supply chain business income scale, reaching 3.31 billion in 2020, with a year-on-year increase of 150.4%.

In addition, with the trend of global connectivity, China's trade volume in the global scope is still increasing, the scale of cross-border e-commerce is expanding rapidly, and the demand for personalized logistics is heating up. Therefore, the cross-border e-commerce solution business, aviation special cargo and direct solution business of origin are booming.

According to the prospectus of China Eastern Airlines logistics, the business volume and revenue of cross-border e-commerce solutions are growing rapidly. In 2020, benefiting from the strong demand for anti epidemic materials, the company's cross-border e-commerce aviation special line cargo volume will reach 11200 tons, and the cross-border e-commerce aviation trunk line cargo volume will reach 10800 tons. At the same time, the transportation price will increase significantly, and the related revenue will reach 846 million yuan, with a year-on-year increase of 109.4%.

The fresh freight volume of China Eastern Airlines logistics direct business increased significantly before the epidemic, and decreased under the influence of the epidemic. In 2020, it was 12400 tons, a year-on-year decrease of 38.9%. However, due to the rise of freight aircraft freight, the revenue of direct production solution still increased significantly, reaching 595 million, with a year-on-year increase of 29.3%.

In addition, in the past three years, China Eastern Airlines logistics aviation special cargo service volume and revenue fluctuated slightly. In 2020, the service cargo volume was 6160 tons, contributing revenue of 178 million yuan.

Overall, the revenue of integrated logistics solutions has occupied 1 / 3 of the total revenue of China Eastern Airlines logistics, and the growth rate is very fast. The company's executives told reporters that it plans to expand its market share at a high speed with low profit, making it the backbone of China Eastern logistics revenue. The executive believes that the new business model of "big data + trunk transportation + modern warehousing + landing distribution" is its future oriented version 3.0 business model.

Moreover, in the view of the senior management of China Eastern Airlines logistics, their business model does not form direct competition with domestic express companies. After all, their customers are mainly C-end users, while the customers of China Eastern Airlines logistics are mainly b-end markets. Therefore, its competitors are not in China, but international express giants such as FedEx and UPS.

In this regard, Yang Daqing, an expert member of the China Federation of logistics and purchasing, believes that based on the strategic positioning of China Eastern Airlines logistics, the competitors are from multiple angles. Although China Eastern Airlines logistics is not a competitor of all express delivery enterprises, it must be a competitor of express enterprises seeking to develop air transport capacity. No matter through investment, joint venture or strategic cooperation, China Eastern logistics needs to supplement the short board of logistics network. If there is no coordination of warehouse distribution service network, it is difficult to get rid of the role of traditional single air carrier. In addition, international air logistics giants such as FedEx and DHL are bound to be their competitors. In the short term, China's air cargo enterprises have not yet established a sound international air cargo network.

However, Qi Qi Qi, associate professor of Guangzhou Civil Aviation Vocational and technical college, disagrees. He thinks that it is not necessary to make horizontal comparison after China Eastern Airlines logistics is listed. In fact, the competitors are themselves, injecting the main bodies of various plates into China Cargo Airlines, China Eastern Airlines cargo and the group before listing. Do a good job in internal integration, with the help of IPO Dongfeng, make good use of raised funds, revitalize stock resources and expand incremental business“ At present, when it comes to China Eastern's logistics rival, FedEx, it's "ambitious". In fact, it's not as good as the Tongda system in the short term, and it can't even compete with SF airlines. " Qi Qi believes that the listing of China Eastern Airlines logistics is just the practice of the market entity born from the central enterprise aviation department in China's logistics market. Only time and performance can objectively answer how China Eastern Airlines will develop in the future.