A recent research report from Sinolink Securities Co., Ltd. highlights that the shipping sector experienced sustained high freight rates in Q2, driven by geopolitical tensions in the Middle East and other regions. The firm anticipates this trend will continue into the second half of the year, potentially leading to a significant upward revision in annual profits, and maintains a positive recommendation for the sector.
In the express delivery segment, institutionalized and normalized anti-internal-competition measures are fostering a steady recovery in pricing. While parcel volume growth is shifting gears, the industry's capital expenditure has passed its peak, which is expected to rapidly enhance shareholder returns. The air cargo sector is benefiting from strong demand driven by high-value goods such as AI-related hardware, and the firm recommends this segment due to sustained positive market conditions. For passenger aviation, supply growth is projected to slow because of capacity constraints at aircraft manufacturers and upstream parts suppliers. Although oil prices are a short-term drag on sector profits, the report suggests this factor is already fully priced in, and it remains optimistic about improved supply-demand dynamics, recommending the airline sector. Additionally, with dividend yields generally above 4% for highways, railways, and ports, and with improving railway fundamentals alongside stable highway and port operations, the report recommends the dividend-heavy sectors.
Core Views: H1 2026 Sees Dual Growth in Revenue and Profit, While Q2 Faces Revenue Growth but Profit Pressure
For the first half of 2026, the transportation sector posted total revenue of RMB 1,782.3 billion, a year-on-year increase of 2.8%, with significant revenue contributions from shipping, aviation, and airports. The sector's net profit attributable to shareholders reached RMB 97.6 billion in H1 2026, up 2.7% year-on-year, driven by strong performances in express delivery, shipping, and airports. However, in Q2 2026, the sector's net profit attributable to shareholders was RMB 40.5 billion, a year-on-year Decline of 15.4%, impacted by weaker results in aviation, logistics, and highways.
Express and Logistics: Express Profits Surge in H1 on Recovering Prices
Express delivery: Parcel volumes grew steadily year-on-year, with prices turning positive. In H1 2026, the express delivery industry generated revenue of RMB 771.40 billion, up 7.3% year-on-year. Parcel volumes reached 100.38 billion items, a 4.9% increase, while the average price per parcel was RMB 7.68, up 2.3%. In Q2 2026, industry revenue stood at RMB 402.39 billion, up 7.8% year-on-year, with parcel volumes at 52.65 billion items (+4.2%) and an average price per parcel of RMB 7.64, a 3.5% increase.
Logistics: Impacted by the broader economic environment, H1 2026 comprehensive logistics revenue decreased by 2% year-on-year, with net profit attributable to shareholders down 10%. In Q2 2026, revenue declined 2% year-on-year, and net profit attributable to shareholders fell by 18%.
Aviation and Airports: H1 2026 Sees Low Passenger Growth, High Oil Prices Cap Airline Profits, While Airports and Air Cargo Maintain Growth
In H1 2026, China's civil aviation passenger traffic totaled 380 million trips, a modest year-on-year increase of 0.4%. Domestic passenger traffic grew by 3.9%, international and regional traffic remained flat year-on-year, and overall traffic was 1.0% higher than in 2019. In Q2 2026, passenger traffic was 180 million trips, down 4.4% year-on-year, with domestic traffic down 5.2% and international/regional traffic down 10.0%, representing an 8.6% decline compared to 2019 levels. Air cargo and mail transport volume increased by 6% year-on-year.
Aviation: The seven major passenger airlines saw a combined 10% year-on-year increase in revenue, but their net losses attributable to shareholders widened to RMB 6.7 billion. The three major state-owned airlines experienced a 10% revenue increase, yet their net losses expanded to RMB 8.2 billion, primarily due to a substantial rise in aviation fuel costs.
Airports: The airport segment saw an 5% year-on-year revenue increase. Growth in passenger flow, along with some income from asset disposals, contributed to a 13% year-on-year rise in net profit attributable to shareholders.
Air Cargo: Cargo demand outperformed passenger demand. Eastern Air Logistics saw a 27% year-on-year increase in revenue and a 10% rise in net profit, supported by growth in AI hardware, high-end manufacturing exports, and cold chain demand.
Shipping: Middle East Geopolitics Drive High-Q2 Boom Across Tanker, Container, Ro-Ro, and Bulk Segments
In H1 2026, the shipping segment reported revenue of RMB 244.1 billion, an 8% year-on-year increase, with net profit attributable to shareholders up 16% to RMB 32.0 billion, primarily fueled by robust profits in the tanker segment. In domestic container shipping, freight rates remained largely stable due to the seasonal Q1 slowdown, a sluggish post-Spring Festival recovery, and capacity being deployed to overseas markets. For foreign trade short-sea container shipping, the Middle East geopolitical situation in Q2 led to higher surcharges, significantly boosting freight rates and reversing the weak trend seen in Q1. In the far-sea container segment, despite increased fleet capacity, the tense Middle East situation reduced vessel efficiency. The CCFI index remained broadly flat year-on-year. For tanker shipping, tension in the Middle East disrupted crude oil and refined product exports through the Strait of Hormuz, forcing longer voyages, reducing efficiency, and raising risk premiums, which led to a substantial year-on-year increase in tanker freight rates.
Specific freight rate performance for H1 2026: The average CCFI index was 1,239 points, down 1.0% year-on-year. The PDCI index averaged 1,125.79 points, a 5.8% decrease. The average BCTI TC7-TCE was USD 29,803 per day, up 56.6% year-on-year, while the BDTI TD3C-TCE averaged USD 321,370 per day, a massive 697.9% increase year-on-year.
Ports: Throughput Grows, Boosting H1 Performance
In H1 2026, cargo throughput at major coastal ports reached 5.867 billion tons, a year-on-year increase of 2.9%. Foreign trade cargo throughput hit 2.568 billion tons, up 4.5%. In Q2 2026, throughput at major coastal ports was 2.99 billion tons (+0.9% year-on-year), with foreign trade throughput at 1.43 billion tons, also up 0.9%.
Highways and Railways: Stable Fundamentals and Steady Passenger Growth
Highways: The highway segment reported revenue of RMB 57.6 billion in H1 2026, up 2% year-on-year, with net profit attributable to shareholders down 5% to RMB 14.0 billion. In Q2, revenue was RMB 29.7 billion (+2%), and net profit was RMB 6.4 billion (-8%). Passenger turnover on highways in H1 was 250.69 billion passenger-kilometers, down 1.3% year-on-year, while freight turnover rose 3.2% to 3.90152 trillion ton-kilometers. In Q2, passenger turnover was 131.28 billion passenger-kilometers (-0.3%) and freight turnover was 2.095273 trillion ton-kilometers (+2.6%).
Railways: Railway passenger transport continued its recovery in H1 2026, with passenger turnover rising 3.4% year-on-year to 826.682 billion passenger-kilometers. Freight turnover increased 6.7% year-on-year to 1.88581 trillion ton-kilometers.
Risk Factors
Key risks include slower-than-expected demand recovery, macroeconomic growth falling short of expectations, depreciation of the RMB, and a sharp rise in oil prices.
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