Global air freight drops 19c in March, but passenger jet cargo works well

THE Association of Asia Pacific Airlines (AAPA) has revealed that global demand for air cargo fell 19 per cent in March compared with the same month last year. However, demand is holding up "relatively well, despite economic disruption in many economies following measures aimed at slowing the spread of Covid-19," it said.

A number of Asian airlines have been operating additional air cargo services using passenger aircraft, adapted to carry cargo both in the bellyhold and in the cabin, in the absence of passengers.

Numerous airlines have also increased their number of freighter services to help compensate for the loss of bellyhold capacity caused by drastic cutbacks to passenger services, reported London's Air Cargo News.FAXTEXT = Essential cargo being shipped by air throughout the coronavirus pandemic includes significant volumes of pharmaceuticals, medical protective equipment and foods.

"We recognise and applaud the efforts being made by many governments to offer financial assistance and support to the aviation industry as well as the wider travel and tourism sector," said AAPA director general Subhas Menon.

"The Asia Pacific aviation community is strongly committed to continuing to work closely with governments, public health authorities, and other international bodies to both respond to current challenges, and at the same time begin to make plans for recovery," he said.

"Aviation has always been a key driver of economic and social development, nowhere more so than in the Asia Pacific region, and will play an important role in the overall recovery effort," Mr Menon said.

Intra-Asia airfreight rates surge; China to Europe/US prices are rising

THE TAC Index shows that airfreight rates on trade routes between China and Singapore, and from China to Korea have jumped over the past few weeks, with prices from Singapore to China hitting SGD4.50 (US$3.27) per kilogramme last week, while in the opposite direction they stood at CNY16 per kg ($2.36).

From China to South Korea rates are above CNY10.5 per kg, up from CNY8 per kg last year.

South Korea to China peaked in week five at above KRW2,600 ($2.34) per kg, before easing off in the following weeks.

Prices on these routes began to surge in week six and week seven of the year.

Meanwhile, prices from China to Europe and China to the US have only recently started to show signs of improvement.

This has led to speculation that the intra-Asian spike in prices was down to semi-conductor companies boosting production ahead of the re-opening of factories in China following the prolonged Lunar New Year holiday due to the coronavirus, reported London's Air Cargo News.

Meanwhile, Peter Stallion from derivatives broker Freight Investor Services said that prices on services from China to Europe and the US were beginning to rise in line with expectations.

"Finally, and what the entire market at this point was expecting, prices rise as freight volumes hit air transport," he said. "Capacity still remains low, passenger traffic has yet to resume, however full freighter schedules have restarted with a number of notable airlines (Lufthansa, Qatar, Emirates, Cargolux to name a few).

"Although supply disruption is providing healthy load factor ex Asia for freighter operators, the core business airlines still remains under significant pressure. Cathay has parked half of its entire fleet, and slashes three quarters of its scheduled flights, Air Cargo Global goes into restructuring, and CargoLogicAir tragically [suspends] operations."

Forwarders also backed these findings. Agility said: "Intra-Asia trade lanes are now tremendously impacted and congested while intra-Asian wide-body belly capacity has reduced heavily and drives rapid surge for AF [air freight] rates on daily base.

"China outbound freight capacity is getting congested while production is gradually resuming to the market. Volumes are ramping up since mid of February and expecting a heavy quarter-end in Q1 2020."

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."

Airfreight rates to hit US$10/kg; more rises as demand surges

FORWARDERS are anticipating ad hoc airfreight rates of US$10 per kilogramme, as shippers become desperate to release goods from China with little or no belly space.

One Chinese forwarder said he expected a Boeing 777 or B747 aircraft to soon cost $10 per kg, and spot rates have already risen twice in the past couple of days, by CNY10 ($1.43) or more per kg to Europe, reported UK's The Loadstar.

"We do expect a possible third increase towards the weekend," he added.

He said there were some charter possibilities, with carriers such as SF Airlines, AirBridgeCargo and China Southern, but he said airlines would not hold the rate, and were quoting for each shipment on each flight, at a rate which could change before the cargo even got on the aircraft.

"We can only take cargo from those customers who understand the tricky situation that everything is beyond our control, basically."

He added that airlines were looking for full chargeable weight and that volumetric cargo was "not a priority" for airlines.

One European forwarder added that rates were already some $6 or $7 per kg, calling it a "global phenomenon".

He added: "Demand is through the roof. And supply is not increasing as carriers, if anything, are reducing further the scheduled passenger flights from Chinese gateways, especially in the north, around Beijing.FAXTEXT = "The market is going very much one way - I reckon rates could hit $10 per kg by the end of the week."

The European forwarder noted that, while at the moment demand is "exceeding supply massively", this could change.

"The market may slow if the world goes into isolation and people stop shopping. If there aren't shoppers, then there isn't demand, and supply becomes balanced."

Intra-Asia sea freight, meanwhile, is "all OK", with no issues on capacity or departures. The current demand for intra-Asian lanes is for manufacturing parts going to Southeast Asia, but that is expected to cool through the month.

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."