Regional Pulse: Airfreight exports slow in Vietnam

Supply chain disruptions in Asia over the past few months have created a shortage of raw materials and components needed for manufacturing production in Vietnam, affecting airfreight volumes out of the country. In fact, Sri Lanka-based forwarder EFL Global’s networks are down between 20% and 30% year over year, steadily declining since March 2022. Paired with border closures prompted by COVID-19 restrictions, goods are unable to even be trucked to Vietnam from China, Evan Rosen, global chief commercial officer at Sri Lanka-based EFL Global, told Air Cargo World . “You’re seeing a lot of major retail apparel brands really putting a halt to airfreight right now,” Rosen said. If shipments were not already being shipped via ocean vessel, often they would be flipped for transport by air, however, that is currently not the case, Rosen said. [caption id="attachment_98498" align="alignright" width="418"] Photo courtesy of Meantime Communications[/caption] “We’re not seeing a lot of that right now, which is very odd for this time of year [and] also with the end of the quarter,” he said. Indeed, some cargo terminals have reportedly been empty due to a lack of demand and production capacity thanks to a dearth of production materials throughout Asia , Marc Schlossberg, executive vice president of air cargo and sales and marketing at New York-based Unique Logistics, told Air Cargo World . “Vietnam is especially dead,” Schlossberg said. “However, [there is a] rumor in Vietnam that Apple’s new iPad factories are supposed to begin airing ex-Hanoi around July 1 and Samsung’s new product launches in August. It’s so dead, we’ll see if the market even moves.” However, with China’s reopening in June , there has been some pickup in airfreight activity, EFL's Rosen said. In fact, EFL is currently still managing some charter flights into Columbus (LCK) and utilizing capacity on carriers like Emirates and Cathay Pacific, Rosen said. The forwarder primarily handles apparel, with Vietnam as the origin of more than 50% of shipments, he said. Regional market outlook Rates were on the rise since March 2022 due to capacity constraints caused by the Ukraine-Russia war, as well as COVID-19-related lockdowns in Shanghai. However, with capacity improving and lack of manufacturing activity, some rate trajectories have begun to ease. “The rates have really come down [because] demand has really slowed,” Rosen said. But “How long will that last? I didn’t think it would last as long as it has already." He further noted that he expected rates to normalize by mid-June, especially with back-to-school demand. However, a “normal peak is coming,” Rosen predicted. Where the market is today has “definitely been a surprise,” he said. “But again, with the China shutdowns, I really believe that that was the driver of not being able to get raw materials into Southeast Asia and West Asia to keep up with the demand and the production schedules. I’m thinking that by the middle of July, August, we should start to see the airfreight market start to pick back up again.” Vietnamese carriers eye growth Despite the slowdowns, some Vietnam-based carriers are eyeing cargo growth, including Bamboo Airlines, a passenger airline that has been operating cargo-only passenger freighters since 2020 . In February, the carrier told Air Cargo World that it remained open to additional freighter services in 2022, even if passenger travel recovered. Indeed, as the passenger carrier aims to expand its focus on cargo, Bamboo Airways appointed Globe Air Cargo, part of GSSA ECS Group, as its GSA representative in Singapore, Malaysia, Indonesia and the Philippines, according to a June 15 release by ECS Group. The carrier has also been bolstering its A321 services, and in May starting operating thrice-weekly flights between Saigon (SGN) and Singapore (SIN), according to the release. Bamboo Airlines on May 4 began operating a twice-weekly route between Hanoi (HAN) and SIN. Commodities being transported from SIN to Vietnam include raw materials, spare parts, pharmaceuticals, e-commerce and electronic goods, according to the release. Meanwhile, shipments from Vietnam to SIN include perishables, electronics and ready-made garments. Bamboo Airways was unable to provide any additional details regarding their cargo plans ahead of publication. Meanwhile IPP Air Cargo, the Vietnam-based startup cargo carrier of Vietnamese retail conglomerate IPP Group (IPPG), is looking to launch its own operations. In March, the Civil Aviation Authority of Vietnam noted that IPP Air Cargo’s application for an air transport business license was complete, according to a release from the company. Next, the Ministry of Transport will review the application and submit it to the Prime Minister for consideration and licensing. The carrier aims to operate five cargo aircraft during its first year of operation, seven in year two and 10 by year three, according to the release. IPP Air Cargo is backed by roughly $100 million, with 30% equity capital and mobilized money. The carrier anticipates transporting roughly 115,000 tonnes of freight in its first year. When operations are expected to commence in not yet clear, and IPP Air Cargo was unavailable for comment ahead of publication. Vietnamese airports HAN and SGN ranked at No. 39 and No. 44, respectively, in Air Cargo World ’s most recent Top 50 Cargo Airports ranking, based on 2020 throughput.

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