Group 1 - The core viewpoint is that shipping rates from Asia to the US are under significant pressure due to oversupply and geopolitical factors, with rates dropping 58% for the West Coast and 46% for the East Coast since June 1 [1] - Xeneta warns that shipping rates from Asia to the US will continue to decline into 2025 due to persistent oversupply, with more new ships expected to enter the market in the second half of the year [1] - Major Japanese shipping companies have expressed uncertainty about the market outlook for the second half of the fiscal year due to increasing trade uncertainties [1] Group 2 - The oversupply of global shipping capacity is leading companies to cancel sailings to maintain freight rates, particularly as demand from Asia to the US weakens and European demand remains sluggish [2] - A temporary rebound in shipping rates in late May and early June was short-lived, primarily driven by companies rushing to ship goods before potential tariff increases [2] - The US domestic logistics system is currently operating smoothly, indicating a significant reduction in cross-border shipping volumes [2] Group 3 - Geopolitical conflicts in the Red Sea have inadvertently absorbed about 10% of global shipping capacity, providing some support for freight rates [3] - Some shipping companies are rerouting to avoid US ports due to tariffs, which extends travel times and reduces available shipping capacity [3] - While shipping volumes from Asia to the US are declining, there is a regional differentiation in freight rates, with rates to Europe and Latin America remaining relatively high [3]

Industry Rating - The industry investment rating is maintained as "Outperform the Market" [1] Core Insights - The aviation industry has incurred significant losses, totaling 329.5 billion yuan from 2020 to 2023, while the cumulative profit from 2010 to 2019 was only 278.2 billion yuan [2][8] - The root cause of the losses is identified as excess capacity, with a 15% increase in the number of aircraft from 2019 to 2024, while passenger traffic only grew by 11% [3] - Average ticket prices for the three major airlines have decreased by approximately 7% compared to 2019, leading to continued losses in 2024 and the first half of 2025 [11] Summary by Sections 1. Aviation Industry Losses - The aviation industry urgently needs to address its losses, with major airlines continuing to report significant deficits [6] - The average ticket price for the three major airlines in 2024 is lower than in 2019, contributing to declining profit margins [11] 2. Capacity and Demand Imbalance - The growth in the number of aircraft has outpaced the growth in passenger traffic, leading to an ongoing imbalance in supply and demand [15] - Aircraft utilization rates have not fully recovered to pre-2019 levels, although passenger load factors have exceeded those levels in 2025 [20] 3. Opportunities for Improvement - There is potential for the early retirement of older aircraft, which could help clear excess capacity and improve profitability [24][27] - The prices of second-hand aircraft have risen, providing an opportunity for airlines to sell or lease older planes for good returns [28] - The profitability of foreign airlines is higher than that of domestic airlines, suggesting a need for domestic airlines to consider external aircraft adjustments [36] 4. Domestic Aircraft Market - The delivery volume of domestic large aircraft is expected to increase significantly, with domestic aircraft projected to become the main source of growth in aircraft numbers [39]

Core Viewpoint - Australia has become a key destination for domestic airlines in China to restore and open new intercontinental routes post-pandemic, driven by changes in passenger demand and international route structures [1][5]. Group 1: Airline Operations - China Eastern Airlines plans to increase the frequency of its direct flights from Shanghai to Brisbane starting in late June, with an initial increase from three to four flights per week [1][4]. - Hong Kong Airlines will launch a direct flight from Hong Kong to Sydney on June 20, marking its second destination in Australia post-pandemic [1][4]. - A total of nine domestic airlines have prioritized Australia for resuming intercontinental routes, with China Eastern Airlines being the largest carrier by flight volume [4]. Group 2: Flight Volume and Recovery - In April, China Eastern Airlines' flights to Sydney, Melbourne, and Brisbane increased by 10.7% year-on-year and by 12.59% compared to April 2019 [4]. - The flight volume of China Eastern, China Southern, and Xiamen Airlines to Australia ranked them as the top three carriers, with some airlines exceeding pre-pandemic levels [4]. - Sichuan Airlines' flight volume has more than doubled compared to April 2019 [4]. Group 3: Market Dynamics - The number of flights and passengers between China and Australia is currently unrestricted compared to routes to Europe and the US, making Australia a focal point for domestic airlines [5]. - The overall international flight volume has not yet returned to pre-pandemic levels, with recovery rates to Germany at 77.8%, France at 64%, and the US at only 26.4% [6][8]. - Domestic airlines are facing an oversupply of wide-body aircraft, prompting them to seek new intercontinental routes, particularly to Australia, where there are no restrictions on flight rights [8]. Group 4: Economic Impact and Tourism - The Queensland government has established the "Attracting International Aviation Investment Fund" (AAIF) worth AUD 200 million to encourage airlines to restore direct flights to Queensland [8]. - In 2019, China was the largest source of international visitors to Queensland, with 497,000 Chinese tourists generating AUD 1.61 billion in overnight visitor spending [8]. - As of the past year, Chinese visitors' overnight spending in Queensland reached AUD 916.1 million, re-establishing China as the top international consumer source for the region [8]. Group 5: Changing Travel Trends - Post-pandemic, the recovery of independent travel has outpaced that of group travel, with an increase in young and family travelers who have higher spending power [9]. - The implementation of transit visa exemptions and strategies like interline baggage handling and free overnight hotel stays are helping to attract more connecting passengers from regions like Japan and Europe to Australia [9].

Core Viewpoint - The global goods trade is expected to face significant contraction by 2025 due to the impact of U.S. tariff policies and trade uncertainties, with a projected decline of 0.2% to 1.5% year-on-year [1] Group 1: Impact of U.S. Tariff Policies - The U.S. has implemented a "reciprocal tariff" policy, imposing a 10% baseline tariff on nearly all imports, with higher rates for specific countries, aiming to address trade deficits and enhance economic security [2] - The tariff increases are anticipated to weaken U.S. consumer demand, with over 70% of U.S. businesses expecting negative impacts on trade [2] Group 2: Shipping Industry Response - The decline in demand on the trans-Pacific route has led shipping companies to reallocate excess capacity to the Asia-Europe route, with approximately 8 large container ships (totaling about 100,000 TEU) shifting from the U.S.-China route to the Asia-Europe route [3][4] - Major shipping companies are actively managing capacity through voyage cancellations and temporary idling of vessels to mitigate the effects of overcapacity and stabilize market prices [5][6] Group 3: Market Dynamics and Future Outlook - The shipping market is expected to remain weak in the short term (May-June), but there may be signs of stabilization as seasonal demand increases [8] - The long-term outlook remains uncertain, with potential oversupply due to new vessel deliveries and a projected container trade growth rate of only 3%, leading to continued pressure on rates, especially on the Asia-Europe route [9] - The futures market for container shipping rates has shown a pessimistic trend, with significant declines since the introduction of the "reciprocal tariff" policy, indicating ongoing pressure on rates [10]