Regional Pulse: Carriers expand Vietnam connectivity as demand returns

While airfreight volumes out of Vietnam declined in July amid a lull in manufacturing, demand has returned as stakeholders diversify sourcing away from China due to supply chain disruptions caused by COVID-19 lockdowns. With a return in demand comes renewed investment from carriers expanding operations in Southeast Asia. On Nov. 2, Lufthansa Cargo doubled its freighter capacity to Vietnam with a new route to Hanoi (HAN) out of Frankfurt (FRA). The twice-weekly service is operated by AeroLogic, a joint venture with DHL Express using 777Fs, and supports 250 tonnes of capacity per week, according to a Nov. 24 release. Lufthansa Cargo already operates dedicated freighters twice weekly to Ho Chi Minh City (SGN). HAN’s demand for air cargo has been on an upward trend, yet Lufthansa had not previously offered routes connecting it directly to FRA, a Lufthansa spokesperson told Air Cargo World . [caption id="attachment_99162" align="alignright" width="366"] (Photo/AeroLogic)[/caption] “Since Hanoi is advantageously located in the gateway between these flourishing economies, the Hanoi station can strengthen our long-haul network in not only Vietnam but also [the] Asia-Pacific region, facilitating our air cargo routes from Hanoi to other destinations in Asia, especially North Asia and Southeast Asia,” the spokesperson said. Meanwhile, Singapore Airlines announced greater flight frequency for several Southeast Asian cities, including SGN, which will see services return to pre-pandemic levels, according to a Nov. 22 release. The carrier is also ramping up connectivity to Bangkok (BKK), Phuket (HKT) and Kuala Lumpur (KUL), among others. Singapore is increasing flights “to support the strong projected passenger demand to these destinations,” a spokesperson told Air Cargo World . “The expansion of bellyhold capacity will continue with the resumption of passenger flights.” Demand ticks up Many companies, including those based in China, have relocated their production facilities in and around Hanoi, making Vietnam a particularly lucrative production location, especially for electronics manufacturers, the Lufthansa spokesperson said. Cargo verticals driving demand include clothing, exotic fish and electronic chips, and the country’s top export commodities continue to include electronics like cell phones, computer products and machine equipment, as well as fashion goods like textiles, garments and footwear, the spokesperson added. U.S.-based logistics company Worldwide Logistics Group (WWL), which has an office in Ho Chi Minh City, is pursuing expansion in Southeast Asia in response to increasing customer demand. The largest volume trade lane WWL operates to the region is from Los Angeles (LAX) to SGN, President and CEO Joe Monaghan told Air Cargo World. The trade lane “is 100% e-commerce-related products,” Monaghan said. “It's people in Vietnam who want to buy U.S. products from a U.S. website, but they don't ship outside the United States. So, the cargo gets consolidated in Los Angeles, and final address labels are put on in Los Angeles.” A foreign-dominated market Despite the rapid airfreight growth in Vietnam, foreign carriers dominate the market. In October, IPP Air Cargo, which would have become Vietnam’s first cargo airline, paused its launch indefinitely in response to softening market demand and pessimism over the global economy. IPP Air Cargo’s application for an air transport business license was approved by the Civil Aviation Authority of Vietnam, and the company had only to wait for review from the Ministry of Transport and the Prime Minister. As much as 80% of the Vietnamese airfreight market continues to be taken up by foreign carriers, IPPG Chairman Jonathan Hanh Nguyen said in the statement.

Regional Pulse: Carriers expand Vietnam connectivity as demand returns

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