Air freight market expects an exciting peak season to come

Air lines convert passenger cabin to carry cargoes

Forwarders say air freight rates rise as June ends, and many expect demand to pick up sharply in August.

The routes from Asia to the US remained stable with both demand from e-commerce and stock replenishment. Meanwhile, demand in Europe has cooled somewhat.

A Shanghai-based forwarder said: “Air freight to Europe has been quiet for a few weeks, but rates haven't fallen for at least two or three weeks - so far, that means the rates have hit bottom for airlines.”

“Now rates have started to pick up from today everywhere; there are general rate increases from major airlines. I assume it’s for two major reasons: there is more cargo; and capacity is reduced".

“The US market was also quite quiet, but about two weeks ago rates started to increase.”

He added: “The typical high season over the past decade has been from mid-August to mid-December. If the blockade ends, we can expect a lively Christmas this year."

A UK-based forwarding company agreed and said it is also starting to see higher import and export volumes.

“We have certainly seen in the last few weeks an increasing volume of cargo from the Indian subcontinent, while China/Hong Kong remains relatively quiet compared to normal, and freight rates reflect that".

“But I do think it's going to be a very active market, in August, for air freight from Asia to around the world - all the signs and forecasts point to that."

Hactl, a major Hong Kong operator, told The Loadstar that this is a difficult market to predict.

Managing director Wilson Kwong explains: “Business at Hactl remains positive with stable numbers of freighters, as well as ‘passenger-freighter’ operations continuing to replace bellyhold capacity lost due to reduced passenger flights schedules.”

“At the same time, cargo volumes are influenced by increasing e-commerce traffic, as well as urgent stock replenishment on key tradelanes like the US. We believe the latter is being caused at least partially by capacity and schedule problems in ocean freight, along with widespread port congestion."

“May and June are normally a period of sluggishness, but this year the situation is a bit different. The commodity market in general has remained strong and maintained throughout the past few months. We saw a slight uptick in May, although June looks less robust."

“The whole situation remains very fluid, with many factors at play, so it’s difficult to identify real trends as yet, or their causes.”

Some Asian carriers are converting more for cargo operations. Airasia currently has eight dedicated to freight operations, and Cathay Pacific today said it has added two more passenger 777s to its cargo fleet, in anticipation of a 'peak'.

“While our passenger network is slowly growing, with an expectation that we will offer around 30% of our normal capacity by Q4, that still leaves a shortfall in vital belly space against anticipated demand for the peak,” said George Edmunds, general manager of commercial commodities.

“We are addressing these capacity concerns by converting two more of our B777 passenger aircraft into cargo-only freighters, by removing seats from the economy class cabins. These will support our post and general cargo shipments around the Asian region.”

The move will increase its fleet of converted passenger-to-transport aircraft to six. The two planes will be taken to HAECO's technical center in Xiamen, where the seats will be removed and stored, allowing an additional 12 tonnes of cargo to be carried on board. The aircraft is expected to operate primarily around the Asia Pacific region and trans-Pacific routes, Cathay Pacific said.

“The aircraft will enable us to carry more general cargo from South-east Asia, particularly Vietnam, and the Chinese mainland. They will also help support Hong Kong Post,” said John Cheng, head of cargo markets and products".

“This business tends to be shipments that are ideal for passenger cabin loading because of their size and general cargo nature, which fit with the restrictions of what cargo can be carried in the passenger cabin. These two aircraft will offer additional capacity and the agility to contend with sudden spikes in demand".

Source: Phaata.com (According to The Loadstar)

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