Freighters resist quarantine and spring back into action, for now

[caption id="attachment_411824" align="alignright" width="453"] An ACE Belgium Freighters 747-400BCF. Photo/ACE Belgium Freighters[/caption] On March 15, ACE Belgium Freighters added to its fleet a second 747-400, an ERF variant (35169, ex-Jade Cargo) that previously operated on the AOC of affiliate carrier Israel-based CAL Cargo [ FAT 005356 ]. After sitting idle since its ferry flight to Liege (LGG) on Feb. 2, the aircraft has since completed two roundtrip flights between ACE’s hub at LGG and the United States. The freighter, deployed this week, is part of a broader boost to cargo flight hours as the world adapts to the unpredictable fluidity injected into everyday life and supply chains by the COVID-19 pandemic. Absent any additional travel restrictions or quarantine requirements that inhibit air cargo, freighter operators continue to ramp up capacity. See also, our recent webinar, Air Cargo in the age of Coronavirus Following the holiday peak each year, it’s not uncommon for carriers to perform maintenance or reduce flight frequencies in conjunction with the annual lull that coincides with the Chinese Lunar New Year. Demand often resurfaces later in the spring in the weeks ahead of the Easter holiday. As expected, freighter utilization dropped in February. Unlike past years, however, it remained lower for much of the month due to prolonged production and trade disruptions related to the coronavirus. Total air cargo capacity to and from mainland China from early February to early March dropped by an estimated 40% year over year, said Brie Carere, FedEx Corp.’s executive vice president and chief marketing and communications officer, during a recent investors call. The situation in Asia took a turn early this month as the growth rate of new infections slowed in East Asia, prompting China’s appetite for air cargo exports to return. “Now that the dust is beginning to settle, specifically with relation to China, we're seeing demand with regards to both inbound and outbound cargo,” said Konstantin Vekshin, executive president of charter cargo at Volga-Dnepr Group . As we reported last week, freighter utilization rates by China’s “Big Three” combination carriers surged 83% month to month for the week of March 5-11, to nearly 3,000 flight hours, according to flight-tracking data analyzed by Cargo Facts . Compared to the same weeklong period in January, freighter flight hours were up 16%. FedEx concurred. “In China, we have seen a rebound week over week since the week of March 3,” Carere said. “ With the urgent need for stock replenishment and with air capacity shortage in the market, we believe demand will stay elevated.” Purportedly now under control in China, COVID-19 was declared a global pandemic March 11. In the days since, travel restrictions and flight cancellations have rapidly severed passenger links, leaving many routes and trade lanes, particularly those dependent on bellyspace, vulnerable to capacity shortages. Carriers on both sides of the Atlantic have made massive cuts to their passenger flight schedules. U.S.-based American Airlines, Delta Air Lines and United Airlines each cut their international passenger flight schedules by 50% or more for at least the next 30 days. Some European carriers have gone even further, with Lufthansa reducing international passenger flights by 90% and Austrian suspending operations altogether. With the trans-Atlantic lanes’ dependence on bellyhold capacity , cargo operators stand to replace much of the lost capacity. “The recently implemented travel ban between Europe and the US is expected to impact cargo capacity significantly since approximately 60% of the air freight capacity between Europe and the US are on passenger flights,“ Carere said. Facing trans-Atlantic capacity constraints, FedEx is extending transit times and implementing peak surcharges for busy lanes. It is also expanding its use of dynamic spot price management. “We’re standing by to see what’s going to develop over the next couple of days in Europe,” Vekshin said. The early phase of the coronavirus outbreak in China dealt a heavy punch to Volga-Dnepr Group’s scheduled carrier, AirBridgeCargo, which had been looking to reduce its freighter fleet , and to the Group’s charter affiliate U.K.-based CargoLogicAir, which ceased operations in February. Like many other carriers, the Group could stand to make up for the rough patch earlier this year if demand holds stable. Analysis of flight-tracking radar by Cargo Facts suggests AirBridgeCargo’s aircraft utilization increased month to month in March. AirBridgeCargo’s fleet comprises four 747-400ERFs, two 747-400Fs and thirteen 747-8Fs. In February, one 747-400ERF and two 747-400Fs were out of service for much of the month. Four of the carrier’s 747-8Fs were idle for one to two weeks last month. The 747-8Fs are now operating with fuller schedules, as is the 747-400ERF. The two 747-400Fs have not flown since Feb. 5 and Feb. 7, respectively. Parked widebody freighter capacity remains at very low levels. In mid-2019, Airbus estimated in its Global Market Forecast that freighter storage stood at about 6%, down from 23% during the financial crisis. The number of freighters in storage increased slightly in the past six months amid the air cargo demand slump. Notably, Atlas Air has parked four 747-400BCFS, and last month, Air Cargo Global and CargoLogicAir ceased operations. Freighters without liens or extensive maintenance requirements will likely be returned to service if the current market environment persists. There are signs that aircraft idle last month will be returned to service following likely routine maintenance checks. At least three FedEx large widebody freighters in maintenance or idled last month are re-entering service or appear to be close to doing so. A 777F (32967) exited maintenance in Singapore (SIN) and returned to service March 9. A pair of MD-11Fs (48749 and 48749) that have been at an MRO in SIN since mid-February completed tests flights in the past week, and could soon follow. One looming complication that could prevent freighters from meeting market needs is the growing risk that flight crews will not be exempt from emerging quarantine requirements. In a March 16 release, IATA began advocating for the exclusion of air cargo operations from any COVID-19-related travel restrictions, and to exclude air cargo crew members who don’t interact with the public from quarantine requirements. For now, most governments seem to be honoring this request and no travel restrictions are currently known to be affecting flight crews or freighter flights. “We are not aware of any restrictions imposed on freighters at the moment,” said Konstantin. As a recent policy change in Taiwan illustrates, the situation is dynamic. Effective March 19, Taiwan, will bar most foreign nationals from entering the country. Those that are permitted to enter will be subject to a 14-day quarantine. While at first it appeared flight crews would not be exempt from the quarantine requirement, some freight forwarders have told Cargo Facts this is no longer the case. Neither Taiwan’s Center for Disease Control nor the Ministry of Foreign Affairs could be reached to confirm the exemption.

Freighters resist quarantine and spring back into action, for now

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