Ex-China cargo capacity still fluctuating sharply between gateways

Air cargo capacity and rates out of China continue to fluctuate sharply between airport gateways as a result of COVID-19 lockdowns, while there is now “a healthy balance” between demand and capacity on trans-Atlantic routes. “The lockdowns [in China] are just moving around the country, from region to region, creating big demand spikes at certain airports,” Laurie Mazieres, trade lane manager at U.S. freighter forwarder Flexport, said during today’s European airfreight update. “The market is fortunately adjusting pretty quickly. We see that options are being implemented by airlines from secondary airports, which are not normally on our air cargo map, so to speak, allowing us to find creative solutions.” [caption id="attachment_93615" align="alignright" width="450"] An Air China Cargo 777F. Photo/Air China[/caption] “The market from South China continues to be very strong as demand has shifted from the north of the country as the lockdown restrictions have taken hold, for example, in the Shanghai area,” Mazieres added. Meanwhile, as COVID cases in Shanghai reportedly stabilize and airport capacity returns, cargo demand from the region has yet to return as many businesses are still closed, Flexport noted. “Conversely, we are seeing that other hubs are experiencing lower capacity with flight cancellations, such as at Beijing (PEK) and Qingdao (TAO), while at secondary airports there are bottlenecks because of unusually high volumes of cargo,” Mazieres said. “Another feature of the market is that fuel surcharges continue to increase, especially from Hong Kong.” The lockdown-driven “yo-yo” effect in ex-China air cargo capacity from one airport to another is also reflected in rates, Mazieres said. For example, when Hong Kong lockdowns prevented trucking from mainland China, rates fell in Hong Kong even as they rose in Guangzhou, roughly 150 kilometers away. Those fluctuations are expected to continue as lockdowns are imposed and lifted, Flexport noted. Capacity returning to Hong Kong The ex-Hong Kong market is showing early signs of a potential return to normalcy, with Cathay Pacific Cargo poised to re-introduce more cargo flights following the May 1 local government adjustments to crew quarantine and medical surveillance requirements. The restrictions had forced the carrier to suspend all long-haul flights in the first week of January, but as the first quarter of the year progressed, Cathay Pacific was able to enhance its schedules and crewing patterns. “At network level, our March capacity was 48% above January’s with a significant increase in regional freighter flights, especially to India and Northeast Asia,” said George Edmunds, Cathay's general manager, cargo commercial. “We have also restored freighter capacity to the Southwest Pacific and, in mid-April, operated our first freighter to Europe since the end of December.” However, the COVID-19 situation in Hong Kong and Shanghai continues to have an impact on the flow of goods, Edmunds said. Constraints on the movement of cross-border trucks has limited the inflow from the Greater Bay Area to Hong Kong. “While this issue remains, our Hong Kong agents, like ourselves, have been able to adapt by the greater use of sea feeders to ports in Hong Kong; unloading cargo from ship to truck for transfer to the airport,” he added. Marine solutions have supported volumes but not allowed full recovery, even as operators have “mounted additional services to other ports in mainland China to alleviate this,” he said. Trans-Atlantic recovery nears Turning to trans-Atlantic routes, demand is increasing both west and eastbound and is almost back to pre-COVID levels, surging 25% over the past four weeks, Flexport's Mazieres revealed. “Demand for freighter capacity is strong, and we see that shippers are actually struggling to get project cargo and high cube pallets across the Atlantic,” she said. “However, overall the good news is that we are seeing a healthy balance between demand and capacity.” As airlines have introduced summer schedules, passenger flights have increased, creating more options between Europe and the U.S. — including services from secondary gateways — which offer deferred routings and differentiated transit times and prices, Mazieres said. As a result of the greater capacity, rate levels are declining, and this trend is likely to continue throughout the summer, she added. The Air Cargo Tech Summit, the new airfreight logistics event presented by Air Cargo World , will take place LIVE in Miami from June 6-7. Learn more and register here.

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