Weekly Wrap: Asian carrier traffic, vaccine shipments and aviation political giving

In this episode of the Air Cargo World Weekly Wrap, airfreight editors Charles Kauffman, Caryn Livingston and Jeff Lee discuss the major news stories for the week of Aug. 10, 2020. Fortunes reversed among some Asian airlines during the second quarter, as Cathay Pacific’s cargo traffic fell below Korean Air, in results that Cathay Chairman Patrick Healy called “the most challenging that the Cathay Pacific Group has faced in its more than seventy-year history.” Associate Editor Jeff Lee gives a comparative overview of how the COVID-19 pandemic affected major Asian carrier results in terms of cargo traffic and revenue. Review the interactive charts in the story on AirCargoWorld.com. In other pandemic-related news, major express and all-cargo carriers are preparing for the eventual need for a strong airfreight supply chain for vaccine transportation. While Russia saw the controversial approval of the world’s first COVID-19 vaccine during the week, Moscow-based AirBridgeCargo Airlines promoted its own readiness for increased vaccine delivery demand, in what could be the next demand surge for air cargo operators amid the pandemic. Listen to more on the topic in the video below, from Editor Caryn Livingston. Finally, political giving from aviation-affiliated political action committees (PACs) has shifted from the normal distribution between Democratic and Republican candidates for federal office during the 2020 U.S. election. Air Cargo World ’s editors discuss all this and more in the most recent edition of the Weekly Wrap. https://vimeo.com/447969837 A transcript is available below. This transcript has been generated by software and is being presented as is. Some transcription errors may remain. Charles Kauffman Hi everyone and welcome to on air with air cargo world, the podcast of air cargo world since 1941, the leading magazine for the air freight industry. I'm Charles Kauffman, your host and air cargo world senior editor. I'm joined today by my fellow editors, Karen Livingston, and associate editor Jeff Lee. Welcome, Karen and Jeff. Caryn Livingston Charles. Charles Kauffman This is the weekly wrapup of what's happening in air cargo for the week of August 10, 2020. I can't believe it's August already. Today is Friday, August 14, 2018. You know, so given that we're halfway through the summer, summer already, which again, I find shocking. I don't know where time has gone by. And that also means that we have a good mix of results from major carriers and airports in the sector for threw through the second quarter of this year. Jeff, I know you have really been covering cargo traffic and second-quarter results for carriers based in the Asia Pacific region. Of course, these carriers are heavily involved in some of the industry's more important trade lanes whether those be between Asia and Europe or Asia and North America. You know, a couple of points that stuck out to me, Cathay Pacific Hong Kong-based Cathay Pacific actually saw their cargo traffic drop year today for the first six months of the year by pretty astounding 24.6% to 4.1 billion SDKs. You know, with With much of backdrop, stemming from a much lower result in the second quarter, in contrast, Korean Air Traffic growth during the same period of ft with cargo traffic of 17.3% to over 2 billion FTK is so for the first time in recent memory, Cathay Pacific actually looks for smaller performed, you know, worse than Korean Air and if we look at some of the other carriers you've reported on Taiwan, bass, China Airlines, and EVA. They also saw rather robust traffic growth in the second quarter. As I'm curious, what are some of the factors you feel introduced to cafes comparatively poor result in the second quarter Jeff Lee Yeah, that's been interesting. And it's also been a bit surprising that Kathy fell by so much compared with these other carriers. I mean, Kathy was always way above all of them in terms of SDKs. You know, up until the end of 2019. And then, you know, in the first quarter it dropped significantly and dropped further in the second quarter, whereas Korean, actually Korean, China Airlines and EPA were they all registered increases going from the first quarter to the second quarter. And of course, China Airlines was probably the most impressive. But I mean, I think part of that was because they just operated more cargo-only flights With their passenger aircraft, even though Can't they actually, again in March I think the scale of the passenger freight network was just this more than then Korean and China Airlines. And of course, eBay registered a small increase but that was impressive considering this small free to think of only five triple seven creases and just a smaller passenger fleet. So, I mean, ordered cafe from September. Interestingly, we'll have a new cargo director. And we'll see whether having a senior management member devoted to the cause of business have that one Every business in the third and fourth quarters Charles Kauffman Alright, so you mentioned though the willingness of some carriers to reconfigure aircraft patcher aircraft as traders are required only us. Do you think this is this cafe's result does it speak to kind of their expectations for recovery of aviation in general? I mean, are we seeing kind of how these varied expectations have played out? Jeff Lee Actually, just on that point, interestingly, cafe, Korean China Yeah, and China Airlines, none of them brief reconfigured, there has to everything's in, you know, in the first or second quarters cafe only really To get to in, starting in July and Korean is, oh, it will soon have a reconfigured triple seven 300. But not yet and certainly not in the second quarter. Another two China and Latin so the reliance of all these carriers on their freighter aircraft is still pretty significant. EA did reconfigure one triple seven, but again, they given the relatively smaller fleets. I think it's impressive that they still managed an increase in FTK. Charles Kauffman Yeah, that is impressive with five triple sevens. So we've seen varied results in terms of traffic performance. Looking at second quarter cargo yields, were they more uniform or did they also bear Across the board from carrier to carrier. Jeff Lee They're worse in variations but I think generally this is perhaps the picture was less than divided and, and they weren't the only ones I'm sure most airlines around the world would have registered increases in Calgary yield simply because of the amount, the capacity crunch and limited capacity everywhere, basically and so that's why cargo revenues increased by quite a bit for everyone including cafe but it wasn't enough to offset that loss that they had on the passenger side And let's not forget caffeine was already facing other kinds of difficulties even Let's before the pandemic. Charles Kauffman All right, thank you, Jeff. Now, I'd like to shift gears now and look at some of the commodities that are moving by air. pharmaceuticals are obviously an important vertical for air freight, year-round, and have been for some time an important focus. But increasingly so vaccines are coming into the spotlight, particularly as the world prepares for the first COVID-19 vaccines or prepares for vaccines that hopefully will come. So, Caryn, you've been following the space quite closely with UPS, prepping freezer farms for the potential vaccine, and then you also have you've covered some carriers, such as average cargo that are, are shipping regularly shipping vaccines and are preparing for COVID-19 vaccine. I'm curious, why is it that you think ups and ABC think they're going to see a share of potential vaccine shipments? Caryn Livingston Right. So kind of like you implied this will be something that we hopefully can look forward to in the future. Obviously vaccines are still in development in countries all around the world. Yeah, airbrush cargo was kind of interesting. They recently moved some yellow fever vaccines for UNICEF. And it's definitely the impression that they're kind of signaling that they are prepared to move these vaccines once they're available. And just like ups, it's important to you know, be ready once something is available for Distribution around the world regarding why these specific companies are, are operating with the expectation that they'll be involved, I think if we, you know, if we look at at what has been happening in air freight so far this year during the pandemic, we've seen, you know, project airbridge is one example with the US government operating with some of the private carriers to ship personal protective equipment by air into the US. Even before that, there was a there were shipments, you know, since China was hit earlier than the US, there were shipments by air of PP into China. So because of you know, the quick shipment timing that is needed to kind of get this equipment where it needs to be. I think it's it's fair to expect the air freight is going to play a lot Roll once vaccines are available for distribution? Charles Kauffman I definitely an interesting parallel between the TPP shipments that we saw really heightened earlier this year and, and the potential vaccine shipments that may be coming along at a later point. Karen, do you think air freight will have sufficient capacity to handle these vaccine shipments if they do materialize? Caryn Livingston I mean, that's kind of been the question of the year you know, how much capacity can we get out of the air freight market? And given how quickly carriers were able to respond, you know, as passenger traffic has plummeted, and suddenly all these planes are grounded by instituting you know, some pretty creative measures, especially the use of passenger planes as freighters sometimes even you know, partially converted removing the seats on the main deck. I think it's pretty likely that these carriers are going to be willing to adapt their plans and their networks to kind of transport these vaccines. Either. Well, I'm sure that there'll be, you know, alongside some scheduled services that we've seen from carriers like Emirates that introduced pretty robust passenger freighter schedules. And then the really large number of cargo charters as well using these planes as well as actual freighters. So I think that of course, it's likely that there will be an ongoing capacity crunch but they're going to definitely adapt their networks to increase capacity as much as possible. Charles Kauffman Right, so it's definitely something the industry is going to be watching closely as its movie at trial vaccines come into play. Shifting gears a bit, we have a major election coming up in the United States. And, Karen, I know you've also spent a bit of time looking at looking back at campaign finance over the course of a few major election cycles and looking at 2020, you've seen quite a shift in Pac contributions. Could you contextualize these figures a bit for us? Caryn Livingston Yeah, definitely. So I did a review pack spending for packs associated with air transport companies. Mostly This is the major airlines as well as some other aerospace companies and manufacturers. And it's not surprising to note that generally weather generally Or midterm election. Contributions to Republican candidates tend to outweigh contributions to Democrats and who are up for federal office. There are a couple of noteworthy election cycles where this kind of departs from the norm. And the current one is one of these kinds of interesting cycles where, rather than a roughly two-thirds split toward Republicans, we're getting much closer to parity. So before this recent election year 2020, it had been a decade since we saw democrats with as large of a share of PAC contributions as they're seeing this year. And, of course, that was under the Obama presidency, the midterm election and prior to that the 2008 election also saw a pretty even split So, yeah, this year, of course, there are still some months ago ahead of the election. And the data that we were able to find was released up to June 26. So it's very possible that this could shift. But in the meantime, it's looking like the industry is definitely shifting more toward a larger share of Democratic support and the election. Charles Kauffman Alright, quite a lot going on this week, Karen and Jeff, thank you for sharing. Looking ahead to next week. What what are you what are you following? Caryn Livingston Yeah, so next week, I mean, as we discussed earlier, it's earnings season right now. So, most of the major carriers and forwarders have either already released their results or will be doing so very shortly. with, you know, the second quarter behind them, we're well into the third quarter. And so of course peak season is going to be coming up and in such an unusual year for the industry. And I think we'll be taking a look at, you know how this peak season might differ from others. We already talked about the capacity crunch that seems unlikely to change for this peak season. So it should be interesting, and we'll be looking at some of the concerns that forwarders and carriers have for this peak season. Charles Kauffman All right, yes, definitely a peak season without a playbook. That is as detailed as what we've relied on in the past. So it could be a very interesting year, especially if, if we see a vaccine into the mix. Before the years over. Well, thank you both for joining us today. That does that about does it for And I'd also like to thank air cover world's key sponsors Alaska air cargo, Hawaiian, Hawaiian air cargo, Swift, food cargo, Southwest cargo, American Airlines cargo and Incheon Airport. I joined us in a couple of weeks on the weekly wrap. Caryn Livingston Thanks, Charles.

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