International air freight volumes continue to fall, says IATA

AIR FREIGHT volumes fell nearly 13 per cent worldwide in August compared to last year reports the International Air Transport Association (IATA), reports Bloomberg News.

August volume was up almost two per cent, compared to July, while freight capacity fell more than 29 per cent in August.

The slow recovery is surprising since limited capacity is expected to hold back further growth. International belly capacity was down 67 per cent in August, which is trending upward compared to 71 per cent in July. Meanwhile, Dedicated freighter capacity is up 28 per cent.

New export orders were up 5.1 per cent in the manufacturing PMI, which could mean a growing demand for goods movement as consumer spending rose through May, June, and July. Still, capacity limits mean airfreight volume can only grow what they can do.

The loss of air freight capacity has resulted in a booming business for the companies in the dedicated freighter business since March.

"There are two trends that have had substantial impact on our industry. The first key trend is the dramatic reduction of air cargo capacity as a result of the significant loss of commercial airline capacity, " said FedEx marketing chief Brie Carere.

Freighter capacity is roughly 66 per cent of the total capacity on the transatlantic lane, 83 per cent on the transpacific, and 80 per cent on the Europe-to-Asia lane.

"This compares to pre-Covid freighter capacity of 33 per cent for transatlantic, 59 per cent for transpacific and 50 per cent for Europe to Asia. FedEx Express is incredibly well-positioned to benefit from a constrained air capacity market," said Mrs Carere.

"In the month of September, we're planning on having 1,000 dedicated cargo charter flights with no passengers, just belly cargo, and serving some really important markets," said American Airlines President Robert Isom.

Regardless of this, dedicated flights from passenger airlines won't be enough to boost the capacity to pre-pandemic levels. As a result, prices will remain high for months. Rates between China, Hong Kong, and the US are up 58 per cent US$5.15 per kilogramme.

Meanwhile, exports out of the Hong Kong International Airport rose almost one per cent.

"The peak season for air cargo will start in the coming weeks, but with severe capacity constraints shippers may look to alternatives such as ocean and rail to keep the global economy moving," said IATA chief Alexandre de Juniac.

Cargolux adds service to Shenzhen to boost China footprint

LUXEMBOURG cargo airline Cargolux has added Shenzhen to its network as it looks to strengthen its presence in China.

The freighter operator said the weekly frequency is routed Luxembourg-Bangkok-Shenzhen before returning westbound to Luxembourg via Bangkok with an additional stopover in Budapest.

Shenzhen is Cargolux's sixth destination in mainland China, reports London's Air Cargo News.

"Shenzhen is China's fourth busiest and the world's 24th busiest cargo airport," the carrier said. "The weekly scheduled all-cargo flight will further strengthen Cargolux's footprint in the area."

Domenico Ceci, Cargolux executive vice president sales and marketing, added: "Shenzhen is an important commercial gateway and this new frequency will allow us to better connect with customers in the region. This additional service between Europe and China will also offer seamless main-deck capacity between these two commercial centres."

Cargolux said the inaugural flight marks the beginning of a regular service between Luxembourg and Shenzhen but the history between the Chinese airport and Cargolux goes back several decades; in November 1992, Cargolux was the first foreign airline, cargo or passenger, to land at Shenzhen airport.

SF Express carries out first large pilotless cargo UAV flight

EXPRESS giant SF Express has completed a successful trial of a large cargo unmanned aerial vehicle (UAV) flight, according to the Xinhua news agency.

The bi-plane UAV took off from an airport in the northwest Ningxia Hui Autonomous Region, which produces various perishable foodstuffs, on August 21 and landed at an airport in inner Mongolia after a one-hour flight.

The FH-98 plane has a maximum take-off weight of 5.25 tonnes and has been designed to carry payloads of up to 1.5 tonnes, with a cabin space of 15 cubic metres.

The aircraft has been jointly developed by SF Express and China Aerospace Times Electronics and is based on the China-developed Y-5B freighter, which itself is based on the An-2. The plane is capable of short take-offs and landing and a cruising speed of 180 kph, meaning it is suitable to serve a regional express hub and nearby cities. It is expected to greatly enhance the efficiency of regional logistics, said SF Express.

The company said it was the first time a large UAV has been used in a logistics project in China. SF Express said the drone would greatly reduce operating costs, to the point that it could eventually compete with trucks.

In 2017, SF Express set up Fonair, a subsidiary, to handle business on the large UAV. To date, Fonair has been given permission to use nine air routes to conduct test flights.

Cathay launches 12-week cargo service to Pittsburgh linking Southeast Asia

HONG Kong flag carrier Cathay Pacific Airways has temporarily expanded its operations in the Americas, with a 12-week cargo service linking Pittsburgh International Airport (PIT) with Southeast Asia.

The new service will supplement the airline's existing network of 19 cargo stations throughout the Americas, including East Coast cargo services to Boston, Newark, and Washington, Dulles, and a dedicated freighter port at New York (JFK).

The temporary service originates in Ho Chi Minh (SGN), stopping at Cathay Pacific's Cargo Terminal at Hong Kong International Airport (HKIA), landing in PIT every Monday and Thursday until November 26, 2020.

Flight CX8800 is operated by a reconfigured Boeing 777-300ER passenger aircraft instead of Cathay Pacific's go-to ultra-long-haul freighter, the Boeing 747-8, of which there are currently 14 in its fleet.

"Cathay Pacific is excited to link Hong Kong, one of the world's key intermodal airfreight hubs, to Pittsburgh. The city is ideally placed between the Eastern Seaboard and the Midwest, home to more than 50 per cent of the population of the United States," said Fred Ruggiero, vice president Cargo, Americas, Cathay Pacific Airways.

"Cargo remains a bright spot for the airline during this challenging time. This temporary expansion underscores Cathay Pacific's commitment to our freight forwarder partners, who requested an expanded cargo service to meet heightened demand. We are pleased to join forces with Pittsburgh International Airport and Unique Logistics and look forward to assisting with future freight needs."

In an effort to introduce additional cargo capacity where possible and help support global supply chains, Cathay Pacific reconfigured two Boeing 777-300ER passenger aircraft into 'preighters,' with seats removed in the economy and premium economy cabins to enable the airline to carry 12 tonnes of additional cargo under extra safety and security measures.

Cargo is currently the stronger performer for Cathay Pacific, operating over 436 pairs of cargo-only passenger flights and carrying over 102,122 tonnes of cargo and mail in August 2020.

Ecommerce surge experienced by UPS attributed to Covid scare

ECOMMERCE got a boost from the Covid-19 scare if the surge in online shopping posted by United Parcel Service is anything to go by, reports the Associated Press.

UPS says shipments from businesses to US consumers soared 65 per cent in the second quarter, helping lift the delivery giant to a US$1.77 billion profit.

In April, UPS executives thought that online shopping would slow down after the early days of the crisis.

"Instead, we saw just the opposite," said the company's new CEO Carol Tome. Consumer online spending surged as stores closed, people sheltered at home, and the government sent them cheques, she said on a call with analysts.

The company's volume jumped 23 per cent to more than 21 million packages a day, and revenue climbed more than 13 per cent.

But while stay-at-home orders and other restrictions to slow the spread of the new coronavirus have meant more business for the delivery companies, it has also strained their networks and threatened to drive up costs.

Deliveries to homes are less lucrative - UPS domestic revenue per piece fell five per cent in the second quarter - and they are more costly because drivers must cover more distance between drop-offs.

UPS and rival FedEx have responded by imposing the kind of surcharges more commonly associated with Christmas to cover their increased spending. They have raised prices on bulky shipments and on retailers whose volumes have risen sharply during the crisis

Ms Tome hinted that UPS could raise prices further on big retailers - most of them are even more dependent on online orders now because many consumers are afraid to go back inside stores.

"While retailers may squawk at price increases that come their way, large retailers have a way to spread that across (many items they sell) and nobody knows," she said.

Ms Tome, 63, is a former chief financial officer at Home Depot and longtime UPS board member who became CEO on June 1. In her first earnings call with investors, she hinted at changes at the 113-year-old company.

She suggested that in the past UPS chased volume instead of profits and "over-engineered" things by, for example, offering too many services that complicated the company's operations and confused customers.

Second quarter profit at the Atlanta-based company was up five per cent from year-ago earnings of $1.69 billion.

Revenue rose more than 13 per cent, to $20.46 billion, easily beating the $17.34 billion average forecast from Zacks Investment Research.

Helane Becker, an analyst at financial-services firm Cowen, predicted UPS will do well in the third quarter, but she said UPS will be challenged to handle rising e-commerce volume during the peak shipping season before Christmas.

"The solution may be increased surcharges to limit volumes during peak, which again would be positive as UPS looks to improve margins of residential delivery," Ms Becker wrote in a note to clients. "Another solution would be to limit the amount of low margin volume it accepts."