Air cargo charters: Overcapacity in freighters

The air cargo charter market is seeing an oversupply of freighters, with the exception being bulk loading aircraft to transport outsized shipments, according to leading air cargo charter brokers. This is putting downward pressure on rates, leaving some operators with their backs to the wall. [caption id="attachment_57065887" align="alignleft" width="300"] © Can Stock Photo / chalabala[/caption] This surplus main-deck capacity contrasts sharply with the shortage of freighters during the pandemic, causing rates to go through the roof. Airlines responded to the shortage by converting grounded passenger aircraft into cargo-only “preighter” configurations. Pierre Van Der Stichele , vice president of global freight at Air Partner , told Air Cargo Next that the current global economic crisis, compounded by the Russia-Ukraine conflict, is delaying air cargo’s post-pandemic recovery. “The market is also having to contend with the arrival of the first freighters — either pure, factory-built or conversions from passenger aircraft — ordered by a significant number of carriers at the height of the COVID outbreak when demand soared along with rates,” he said. “These aircraft are adding to the overcapacity which already exists.” He expects the surplus to continue through at least the end of the year. “For example, some of the new narrowbody freighters — i.e. A321Fs and B737-800Fs — are being significantly under-used while others are flying on a scheduled basis every day of the week, but operating at a loss, having been positioned on the market ready for an upturn in demand whenever that comes,” he said. Dan Morgan-Evans , group cargo director at Air Charter Service , put a more positive spin on oversupply. “It’s a double-edged sword really,” he told Air Cargo Next . “More carriers give us more options and ultimately our customers better value. But yes, more capacity means demand for widebody charters will possibly decrease. However, I would say this is more the case for general airfreight and not necessarily for the traditional cargo that requires charters.” Return to pre-pandemic rates Van Der Stichele said air cargo charter rates are hovering around pre-pandemic levels. “I strongly believed that coming out of the pandemic, the air cargo business would be on a hike, but this has been impaired by the Russia-Ukraine conflict and also reduced demand for general consumer products,” he said. Morgan-Evans added: “Rates have definitely returned to pre-COVID levels, and we can now be very competitive on any APAC- or China-to-Europe business.” Van Der Stichele was hesitant to forecast market rates for the second half of the year due to too many unknowns. “Taking aside any humanitarian emergencies, such as natural disasters , which may cause an influx in cargo charters, there are few indications that can help us forecast what Q3 and Q4 will look like,” he said. “I see the second half of the year slightly better that first half, yet nothing to be excited about, unless there is a resolution between Russia and Ukraine .” Morgan-Evans noted that there has been a shift in the types of requests Air Charter Service has been receiving. “We see less general airfreight but for the niche, traditional charter market, our business has held up quite well,” he said. “I think we will probably see a slowdown over the summer and hopefully a reasonable peak season in Q4.”

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