Air Cargo recovery on the horizon for Latin America?

Politics may still be in a tailspin in parts of Latin America, but there are signs that after years of declining traffic, the air cargo market in the region is finally beginning to regain altitude. The Latin American and Caribbean Air Transport Association (ALTA) recently reported March intra-Latin American cargo traffic transported by carriers headquartered in the region up 3.0% y-o-y, to 130.6 million FTKs. Ex-Latin American cargo traffic meanwhile, continued to drop, albeit less steeply in the past, down 7.7% y-o-y to 245.6 million FTKs.

This continued drop in international traffic may not be as bad as it seems however, there are anecdotal reports that traffic ex-Latin America is rebounding, though perhaps not for local carriers. While Latin America-based carriers reported an 18.5% drop in cargo traffic between Latin America – North America in March, United Airlines, American Airlines and Delta Air Lines reported average monthly cargo traffic gains of 15%. Air Canada has also gradually increased main-deck capacity between Latin America and North America with 767Fs ACMI-operated by Cargojet.

Of course, much of the increasing cargo traffic reported by North American carriers can be attributed to growth on other trade lanes, but the carriers have noted strong growth in perishables and other commodities out of Latin America – many of which are ultimately bound for Asia. Latin American carriers have also benefited from the burgeoning demand for imported perishables in Asia. Cargo traffic from Latin America-based carriers on this trade lane rose 27.1% y-o-y to 10.7 million FTKs in March.

There are signs that airlines in the region are nearing a turning point. Chile-headquartered LATAM Cargo is emerging from a multi-year restructuring plan with a smaller freighter fleet, and products adapted to the current market climate. By the end of this year, LATAM Cargo’s freighter fleet will include eight 767Fs, and a single 777F, down from sixteen freighters (including four 777Fs) before the recession. New products and increased reliance on belly space may help the carrier better compete on the North American trade lanes where US-based carriers offer significant belly capacity. As for perishables and pharmaceuticals, LATAM Cargo has also become the first carrier in Latin America to obtain IATA’s CEIV Pharma certification.

Moving north, Columbia-headquartered Avianca Cargo reported its 1Q17 cargo traffic up 10.9% y-o-y.  With a smaller freighter fleet of five A330-200Fs, most of Avianca Cargo’s main-deck traffic is intra-Latin America, (with connections to Miami) with no long-haul freighter flights to Europe or Asia. As such, it relies on its widebody passenger fleet for airfreight capacity on long-haul routes. Avianca Cargo says its cargo division has benefited from the continued introduction of 787 passenger aircraft.