Asian airlines face tough start to 2020 with coronavirus

AIRLINES in Asia saw international air cargo demand, as measured in freight tonne kilometres (FTK), drop by 5.1 per cent in 2019, as well as a shaky start to 2020 now that the coronavirus is deterring travellers worldwide.

Figures from the Association of Asia Pacific Airlines (AAPA) show that freight capacity expanded by just 1.3 per cent, resulting in a 3.9 percentage point drop in the average international freight load factor to 59.5 per cent for the year, reported London's Air Cargo News.

AAPA director general Andrew Herdman said: "Air cargo markets experienced a very challenging 2019, with the 5.1 per cent drop in demand marking the steepest fall since the global financial crisis. Declines in new export orders throughout the course of the year led to lower demand for air shipments.

"Overall, in 2019, Asian airlines faced an intensely competitive operating environment, with downward pressure on yields and profitability, only partially alleviated by the 7.2 per cent decline in global jet fuel prices to an average of US$79 per barrel for the year."

Looking ahead, Mr Herdman said: "The general outlook for 2020 was already clouded by uncertainty over prospects for the global economy and still unresolved trade disputes.

"The recent 2019-nCoV coronavirus outbreak has now been categorised by the World Health Organization as a Public Health Emergency of International Concern. The related imposition of travel restrictions and widespread public concern has led to significant falls in demand for air travel on routes to/from and within China, and corresponding adjustments to airline schedules."

SEKO expands air freight presence through buy up of Air-City in New York

SEKO Logistics has wrapped up its largest-ever acquisition with the purchase of New York-based Air-City in a bid to expand its presence in the westbound airfreight market, while also adding resources to its key New York region.

The purchase will also see SEKO add facility infrastructure in the tight real estate market near JFK international airport, reported London's Air Cargo News.

"Air-City will give us immediate depth in the growing westbound airfreight and cross-border e-commerce trade for goods going to China," said SEKO president James Gagne.

"[The acquisition] also gives us strategic air freight volumes and expertise into China as the rising demand for US goods increases along with a rising middle class in China.

"We have also added strength to our US import services with the all-important 'Section 321' and Type 86 entries for e-commerce capabilities that are so critical for cross-border e-commerce in the US as well as a network of bonded warehouses in the [country].

"The outstanding Air-City team will not only assist our current clients with expanded and faster value-added forwarding and global e-commerce capabilities, they will also support our award-winning air product team and help our US and international network of strategic partner locations to grow their business faster."

Air-City executive vice president Chris Zheng added: "This partnership with SEKO will give a transformational boost to our rapidly growing cross-border e-commerce and freight forwarding businesses to better serve our clients.

"Our cultures are so aligned with the speed of e-commerce, growth of cross-border e-commerce expertise, focus on seamless technology and growing freight management capabilities. We are excited for our next phase of growth and the additional benefits we can deliver for our clients in Asia and the United States as part of the SEKO organisation."

The company also acquired a majority shareholding in its partner Omni-Channel Logistics Australia to further solidify and "grow its e-commerce and technology solutions for retailers."

China's air cargo sector is hit by slow volume growth, overcapacity

CHINA's airfreight industry has endured a "terrible" year on the back of weak volume growth and a rapid surge in capacity.

According to Shenzhen-based agent Airsupply International Logistics Group's team leader Scola Chen, forwarders with block space agreements (BSAs) have "been through a difficult time".

He explained: "This year some small bulk freight forwarding companies that did not sign too many BSAs made [more] money with target end customers."

Mr Chen told London's The Loadstar BSAs were still needed, but rates were dropping. Chinese cargo airlines have been feeling the effects too, and some had suffered "huge losses", Mr Chen was quoted as saying.

"Uni-Top Airlines recently grounded cargo aircraft to seek restructuring, while Longhao Airlines was sold to state-owned Henan Civil Aviation Development Investment. YTO Cargo Airlines and SF Airlines also face a dilemma of low airplane utilisation," he said.

Mr Chen noted that, during the first 10 months of the year, China's air cargo volumes rose by just one per cent to 6.1 million tonnes, the lowest rate since 2012.

"By comparison, the capacity growth trend in 2019 is extremely fast, with no less than 10 provincial capitals on the mainland racing to become world-class international air cargo hubs." They include Zhengzhou, Xi'An, Wuhan, Changsha, Nanchang, Jinan and Urumqi.

And, with a similar criticism to government subsidies distorting the China-Europe rail freight market, Mr Chen said the competing provinces were partly to blame for the overcapacity.

"During peak hours, all-cargo charter flights from mainland China to Liege in Belgium alone have no less than 30 flights a week.

"The blind policy leads to disorderly expansion of transport capacity, resulting in the oversupply in charter operators. In the bleakest time, air rates from China to Europe were less than CNY10 (US$1.40) per kilogramme."

Airsupply International Logistics Group focuses on airfreight ex-China to the US and European Union. Mr Chen said the company had seen "no discernible peak season" in the first 10 months of 2019, despite Amazon's Prime Day and the usual spike around China's National Day.

"It was not until the end of October that the volume of goods increased all of a sudden, which was in line with some peak shipping time at end of the year for e-commerce events such as Singles' Day and Black Friday," he said.

Looking ahead to 2020, Mr Chen said he expected capacity reductions, as a number of airlines and charter companies were expected to miss revenue targets.

"The only uncertainty is that many local governments in the mainland might introduce larger financial subsidies to cover the losses of charter operators, in order to boost the economic development of local industries."

China, Hong Kong air freight traffic push up global volumes

GLOBAL air cargo load factors continued to rise during the first 11 months of 2019, setting the scene for a potential market rebound in 2020.

According to the latest analysis from WorldACD, load factors have increased steadily since August, up 2-2.5 per cent during September, October and November.

The most notable factor in the November results was the continuing growth in air freight volumes in China and Hong Kong. The two locations together increased their outgoing volumes by 4.6 per cent in October and November, reported American Shipper.

"Main engines behind this growth are the destinations Europe and the Middle East and South Asia (MESA), but exports to North America decreased," the analyst was cited as saying.

High-tech was the fastest growing export product category in China and Hong Kong. "The origin Asia- Pacific as a whole, whilst more than five per cent down for the year 2019, did not show a year-over-year decrease in November," noted the analyst.

"All other origin regions except one, also showed a better year-over-year performance in November than in the 10 months before. That one exception was Europe; minus 5.1 per cent year over year for the year up till now, but minus 5.5 per cent for November."

Worldwide chargeable weight was down by 6.9 per cent year on year in August, by 5.3 per cent in September, by 4.7 per cent in October, but by only 2.5 per cent in November.

"If the trend continues, the month of December may be the first month in 2019 showing no year-over-year decline. But even if December year over year would turn out to be 'neutral', the worldwide volume for the full year 2019 will be down 4.3 per cent compared to 2018. Taking out the 'bumper year' 2018, the change from 2017 to 2019 will be minus 2.2 per cent."

IAG Cargo finalist to test machine learning for ULD management

IAG CARGO. the air freight arm of International Airlines Group, has concluded its 2019 accelerator programme, Hangar 51, reports New York's Air Cargo World.

For the past 10-weeks, IAG Cargo has been working with its chosen finalist, Spain-based startup Allread MLT to explore the use of machine learning to improve ULD container management.

With the goal of optimising stock-taking process for ULDs, Allread intends to train its machine-learning software to recognise ULD containers and read container numbers.

"These past 10 weeks have been jam packed researching the problem statement and understanding how the [ULD management] process works today,?said IAG Cargo innovation chief Carly Morris .

Training the algorithm has entailed extracting data from thousands of ULD images. Following the accelerator course, Allread, along with the 12 other finalists selected by IAG companies at a pitch event earlier this fall, will participate in a demo day next month in Barcelona.

Until then, Allread will continue working an app that will help IAG Cargo create efficiencies and improve the accuracy of data it collects about its assets.

In its fourth year, IAG Hangar 51 accelerator received 474 applications from across 50 different countries in 2019. This year marked IAG Cargo second year participating in the programme, during which it was fielding startups in the uture cargo logistics?category.