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.

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."

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 Pacific anticipates historic loss of US$1.28 billion due to virus

HONG Kong's flag carrier Cathay Pacific says it expects to incur a substantial loss of HKD9.9 billion (US$1.28 billion) in the first six months of 2020 based on its unaudited results.

The loss of HKD9.9 billion includes impairment charges amounting to approximately HKD2.4 billion, which mainly relate to 16 aircraft that are unlikely to re-enter meaningful economic service again before the 2021 summer season together with certain airline service subsidiaries assets. The airline reported a net profit of HKD1.3 billion in the first six months of 2019.

Cathay recently received HKD680 million from the government's employment subsidy scheme aimed at offering financial assistance to companies hit by the pandemic. In addition, the Hong Kong government also appointed two officials to the group's board of directors together with a HKD39 billion recapitalisation package after the airline warned it was close to collapse.

Cathay Pacific Group chief customer and commercial officer Ronald Lam said: "The landscape of international aviation remains incredibly uncertain with border restrictions and quarantine measures still in place across the globe. Although we have begun to see some initial developments, notably a slight increase in the number of transit passengers following the easing of transit restrictions through Hong Kong International Airport, we are still yet to see any significant signs of immediate improvement."

On the cargo front, Cathay Pacific and Cathay Dragon carried 93,228 tonnes of cargo and mail in June, a decrease of 43.1 per cent compared to the same month last year. The month's revenue freight tonne kilometres (RFTKs) fell 35.8 per cent year on year. The cargo and mail load factor increased by 11.7 percentage points to 74.5 per cent, while capacity, measured in available freight tonne kilometres (AFTKs), was down by 45.9 per cent. In the first six months of 2020, the tonnage fell by 31.9 per cent against a 31 per cent drop in capacity and a 24.6 per cent decrease in RFTKs, as compared to the first-half period for 2019.

Cathay Pacific continued to operate a full freighter schedule as well as chartered flights from its all-cargo subsidiary, Air Hong Kong, in June. There were fewer cargo-only passenger flights compared with May.

Mr Lam said: "Despite a mild pickup in general airfreight movements, our cargo tonnage fell by 5 per cent month on month as demand for medical supplies waned following a peak month in May. The reduction of long-haul carriage from the Chinese mainland and Hong Kong made way for movements from Southeast Asia and the Indian sub-continent as local lockdown measures eased.

"Meanwhile, the improvement in inbound Hong Kong loads and network support led to a higher load factor, which increased 11.7 percentage points year on year to 74.5 per cent. Yields came down following the significant rise seen in May."

The two airlines carried a total of 27,106 passengers last month, a decrease of 99.1 per cent compared to June 2019. The month's revenue passenger kilometres (RPKs) fell 98.8 per cent year on year. Passenger load factor dropped by 59.3 percentage points to 27.3 percent, while capacity, measured in available seat kilometres (ASKs), decreased by 96.1 per cent. In the first six months of 2020, the number of passengers carried dropped by 76 per cent against a 65.7 per cent decrease in capacity and a 72.6 per cent decrease in RPKs, as compared to the same half-year period for 2019.

Commenting on the passenger figures, Mr Lam said: "Demand continued to be very weak in June with our airlines carrying less than 1 per cent of the passengers we carried in the same month in 2019. We operated about 4 per cent of our normal passenger flight capacity in June. This was slightly more than we operated in May, having resumed services to some destinations such as New York, San Francisco, Amsterdam and Melbourne in late June. Load factor remained low at 27.3 per cent, and on average we carried approximately 900 passengers a day only.

Looking ahead, Mr Lam said: "While some markets are starting to relax border restrictions and quarantine requirements in July, we remain cautious and agile in our approach to resuming our passenger flight services. We have adjusted our overall capacity for July to approximately 7 per cent, which remains subject to the potential further relaxation or tightening of government health measures. We expect that our airlines will operate up to 10 per cent of the normal flight schedule in August and will continue to assess the potential of increasing more flights and adding destinations for our customers in the coming months.

"The one certainty facing the global aviation industry is that the landscape will be significantly changed when international air travel recovers. The Group is moving decisively to best position the business to be competitive and to secure its financial health over the long term in a new normal. What will not change is our resolute commitment to safety, to serving our customers and our dedication to contributing to the success of the Hong Kong international aviation hub. We remain absolutely confident in the long-term prospects of both the Cathay Pacific Group and our home hub."