Regional Pulse: Australia and New Zealand see demand return

Australia and New Zealand are seeing demand and capacity begin to return to pre-pandemic levels after two years of COVID-19 restrictions in the Asia-Pacific region hampered export traffic and government loans kept carriers in the air. When borders reopened for the countries Feb. 21, 2022, tourism resumed, but bellyhold capacity remained low. As restrictions and increases in cargo revenue have eased, stakeholders are more optimistic about traffic numbers, though peak season is likely to remain muted in the region . Demand normalizes [caption id="attachment_57132194" align="alignright" width="408"] Photo/Air New Zealand[/caption] Demand and supply metrics are normalizing after the Australian government on June 30 halted the International Freight Assistance Mechanism (IFAM), a loan program that had partially funded carriers like Qantas since April 2020. Qantas has seen unprecedented record international freight yields this year due to constrained bellyspace and continued growth in e-commerce , according to the carrier’s report for FY22 ending in June. Net freight revenue for the period totaled $1.96 billion, a 49% year-over-year increase from $1.31 billion in 2021, the report stated. The carrier is also developing its freighter fleet, adding six A321s to meet growing e-commerce demand, according to an August release. Meanwhile, IFAM funds to Air New Zealand are tapering off and will end in March 2023. Cargo revenue continued to perform strongly for the carrier in 2022, with revenue increasing 32% YoY to $1 billion, according to a report for FY22 ending in August. However, despite that increase, Air New Zealand posted a $725 million loss for the year, compared with the $444 million loss posted in 2021. Nevertheless, export demand from South Pacific airfreight markets in both countries remains strong and continues to be driven mainly by perishables, Jan Kleine-Lasthues, chief operating officer of airfreight at Hellmann Worldwide Logistics, told Air Cargo World . “However, compared to the pre-pandemic period, demand is lower due to ongoing capacity disruptions and weather-related challenges,” he said. E-commerce has also been driving demand since the pandemic, Kleine-Lasthues noted. While perishables like fruit, vegetables, dairy products, meat and seafood continue to be in demand, imports tend to veer toward high-tech goods, consumer products, and higher-value industrial goods and components, Stuart Asplet, sub-regional managing director, Pacific, at Geodis, told Air Cargo World . “With imports, we might see the strong demand taper off in the coming months in light of higher interest rates and waning consumer demand,” he said. The purchase of vaccines and personal protective equipment (PPE) has slowed, Asplet added. Geodis foresees continuing demand and regular shipments of home test kits and consumer goods flying through the region. “The growth rate of these shipments is likely to remain moderate based on the increasing availability of ocean freight capacity, combined with waning consumer sentiment,” he said. “We expect this cargo to remain a feature of the imported landscape for the foreseeable future.” Traffic resumes but peak remains short With the reopening of borders, Hellmann has seen a resumption of air traffic from many markets around the globe, Kleine-Lasthues said. “Exceptions are some Asian countries where COVID measures are still in place — such as China, Hong Kong or Japan,” he explained. “But we expect to see more flights coming back to Australia and New Zealand also from these countries as COVID restrictions ease in the coming months.” However, the increased number of flights does not necessarily mean a direct increase in bellyhold capacity, as some airlines have introduced cargo-unfriendly passenger aircraft, and more passenger-heavy flights are affecting cargo payload, he added. Meanwhile, peak seasons in 2020 and 2021 were weak due to capacity constraints, though the outlook for this year’s peak is slightly more optimistic. Hellmann expects this year’s peak to be stronger, though “comparatively quiet” compared with pre-COVID figures, Kleine-Lasthues said. Geodis’ Asplet agreed, noting, “We can expect this year’s peak season — if it takes place at all — to be relatively short. In particular, it will be mostly limited to higher-value items with shorter lead times that are perhaps less suited to ocean logistics solutions.” Join Air Cargo World for our next webinar, “Dangerous goods in focus: Shoring up air cargo logistics,” on Tuesday, Nov. 15, at 11 a.m. ET. Click here for more information and to register.

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