Capacity shrinks on north trans-Atlantic trade lane

Carriers are seeing less freighter capacity on the north trans-Atlantic trade lane than usual as demand for various commodities continues to surge. “Factors are a little heightened from where they would ordinarily be, which is a good thing for business,” IAG Cargo Managing Director David Shepherd told Air Cargo World. . “We’ve got very strong trade flows, [including] a lot of perishables business as you’ve expected to Latin America and from Latin America, [and] a lot of automotive stuff flying on both the southern trans-Atlantic and the northern [trans-Atlantic trade lane].” Although passenger travel is returning , IAG Cargo hasn’t had “as much capacity to deploy into parts of the world that would be a little bit more cargo friendly,” he said. Specifically, IAG Cargo has been flying baby formula to the U.S. due to the current shortage , as well as vaccines and other commodities such as whiskey and contact lenses, Shepherd further noted. The London-based cargo handler continues to grow its network however, and this month upped capacity to both Dubai (DXB) and Johannesburg (JNB) with a daily double service using an A380 or A351 aircraft, Shepherd said. Further, IAG Cargo hopes to launch additional flights on the southern trans-Atlantic into Latin America for the winter season, as well.” [caption id="attachment_58018" align="alignright" width="490"] (Photo/IAG Cargo)[/caption] While airfreight demand overall is still high, there is a “ natural dip at the moment," Shepherd said. “There is always a softening in the summer … [and] there’s not much production flying on [aircraft] because [people] are on holiday, we’re not making stuff in factories,” Shepherd said. “So, there’s always going to be a bit of a supply-demand imbalance at this time of year.” Like many cargo stakeholders , Shepherd expects a softer peak season but remains “cautiously optimistic” about upcoming demand. “This year is going to be different, and I think what we’re likely to see is less capacity in the market than there ordinarily is, and demand patterns are going to be different because I think we’re going to see … consumer demand softening,” Shepherd said. However, with Christmas, Singles Day and Black Friday around the corner, Shepherd anticipates that the cargo market is still going to be “crazy busy.” IAG Cargo ranked No. 25 in Air Cargo World ’s most recent Freight 50 ranking of the world’s top cargo carriers, based on 2020 tonnage. See also : Regional Pulse: Forwarders shift volumes away from London A market overview Air cargo volumes continued to decline in August, with a 10% drop over the first three weeks of the month, and an additional 5% drop in the last week alone, according to an Aug. 25 WorldACD market update. The decline is steeper than the past year, which saw a 6% decline over the first three weeks of August. Flown tonnages also decreased across most of the main airfreight regions, WorldACD reported. For instance, volumes ex-Europe and from Middle East and South Asia each declined 8% when comparing the last two weeks with the preceding two weeks (2Wo2W). Meanwhile, the trans-Atlantic region is seeing a significant drop in airfreight rates due to the rebound in summer passenger traffic, according to the latest analysis from CLIVE Data Services . Rates on routes from the U.S. to Europe, on a downward trend since April 25, are down 3.5% week over week to $1.65/kg, according to the latest rate data from TAC Index. Routes between London Heathrow (LHR) and the U.S. are up 2.5% WoW to $3.22/kg. Meanwhile routes from Frankfurt (FRA) to North America are down 14.7% WoW to $3.47/kg. Rates on both trade lanes have also been trending downward since April 4, while U.S.-Europe route has been relatively flat, albeit on a slight downward trajectory since April 25. [caption id="attachment_57131940" align="aligncenter" width="1086"] Source: TAC Index[/caption] Indeed, export markets from the Europe, Middle East & Africa (EMEA) region to the Americas are “slowly softening in rates and increasing in available capacity to major U.S. cities due to summer holidays in Europe,” Crane Worldwide recently reported. However, import markets in the EMA region are seeing backlogs in Paris (CDG), FRA, LHR, Amsterdam (AMS) and Milan (MXP) due to staff challenges and labor shortages . Meanwhile, strike actions at Flexstowe that started last week could cause additional constriction in airfreight capacity. Join Air Cargo World for our next webinar, “Forward Thinking: Best practices for freight forwarder success,” on Tuesday, Sept. 13, at 11 a.m. ET. Click here for more information and to register.

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