Cargo delivers lifeline to Taiwanese cargo operators in 2020

Taiwan-based combination carrier China Airlines made an incredible pivot to cargo for the month of May 2020, reporting cargo revenue for the month up by 152.8% year-over-year. Despite reporting May passenger revenue down 96.3% year-over-year on passenger volumes that had dropped to just 9,121 from 1.3 million a year earlier, China Airlines acted more like an all-cargo carrier, resulting in operating revenue that was just 18.9% lower. YoY changes to cargo revenue In past years, China Airlines has derived roughly one-third of its transport revenue from cargo. Last year, cargo’s contribution to the carrier’s operating revenue was roughly 31%. For May 2020, cargo’s contribution was 94%, with cargo revenue of $308.6 million compared to passenger proceeds of just $9.6 million. See also: 10 carriers where cargo contributes the most China Airlines was able to maximize utilization of its sizable freighter fleet, comprised of eighteen 747-400Fs. May cargo traffic rose 14.2% to 514 million FTKs as increased freighter fleets led to an 8.2% boost in AFTKs, which grew to 685 million FTKs. Year to date, cargo revenue is up 60.7% on traffic that is higher by 8.2%. YoY changes to cargo traffic The narrative is similar for Taiwan’s other large combination carrier. Last year cargo contributed 20% to EVA’s bottom line, but in May 2020 that figure rose to 87%. Even though cargo traffic was down 2.2% compared to May 2019, revenue rose 161% to $192.5 million. As for yields, both carriers have seen sharp swings since the beginning of the year, culminating in a year-on-year increase of 121% for China Airlines and 167% for EVA in May. YoY changes to cargo yield Unlike China Airlines, which has maintained a sizable widebody freighter fleet, EVA has reduced its fleet to just five 777Fs. A decade ago in 2010, the freighter fleets of the two carriers looked relatively similar, with China Airlines operating nineteen 747-400Fs and EVA operating fifteen freighters: seven MD-11Fs, three 747-400Fs and five 747-400BDSFs. As a consequence, EVA has turned to operating passenger freighters amid the capacity crunch. Although yields remain elevated compared to the beginning of 2020, data from the TAC Index indicates airfreight rates between Asia and the United States peaked in May, and have since come down. Composite rates between Shanghai (PVG) and the United States based on all-in cost to carrier and the actual weight on Master AWBs fell 7.4% week on week to $4.66 as of June 22, according to the Index. Composite rates for shipments moving between Hong Kong (HKG) and the United States was off by $0.04 at $5.29. The chart at right shows the composite actual net price index for trans-Pacific routes ex-PVG and ex-HKG. Actual net price PVG and HKG to US [caption id="attachment_414097" align="aligncenter" width="538"] Source: TAC Index[/caption] Rates between major trade lanes connecting Asia and Europe fell according to a steeper slope, with composite rates ex-PVG to Europe down 30.8% from last week, to $3.70. Rates ex-HKG to Europe were more resilient, down by $0.17 at $3.99. The chart shows actual net price for routes ex-PVG and ex-HKG to Europe. Actual net price PVG and HKG to EUR [caption id="attachment_414098" align="aligncenter" width="502"] Source: TAC Index[/caption]

Cargo delivers lifeline to Taiwanese cargo operators in 2020

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