Embraer S.A. (NYSE:ERJ) inked a pact with China's Lanzhou Aviation Industry Development Group to convert 20 E-Jets into freighters.

Financial terms of the deal were not disclosed.

Following the transaction, Lanzhou becomes the launch customer for Embraer's Passenger-to-Freight (P2F) conversion in China.

"The opportunity in China had a significant influence during the decision-making process of the launch of our P2F program," said Embraer CEO Arjan Meijer.

"It is a market with increasing demand for cargo aircraft to accommodate the tremendous growth of E-commerce trade and the consequent evolution of the logistics industry," Meijer added.

Embraer forecasts a market demand for 700 E-Jet freighters over the next 20 years. 

The Chinese market is estimated to need 240 freighters of this size, accounting for 34% of the global total, powered by demand from the e-commerce and logistics sectors.

Price Action: ERJ shares were down by 3.55% to $16.03 on Tuesday.

Image: Embraer.com