Nippon Cargo Airlines’ (NCA) fleet of eleven 747Fs has now been grounded for more than a week as government authorities continue to audit the carrier’s maintenance records. This sudden loss of capacity ex-Asia, combined with a number of shippers rushing to fortify inventories of Chinese goods ahead of new duties scheduled to be imposed as part of the Trump Administration’s trade war with China, has elevated rates on some trans-Pacific trade lanes to calendar year-highs.
A regional executive at the Shanghai branch office of a major forwarder told Cargo Facts that forwarders possessing capacity arrangements with multiple carriers were less-impacted than others. Still, with three scheduled trans-Pacific flights no longer calling to Shanghai Pudong International Airport (PVG), the overall impact on a market like Shanghai is quite significant, particularly as demand remains robust. As capacity tightens, rates are starting to rise accordingly. The TAC Index reported air freight rates from Hong Kong to North America at US$4.09/kg on 25 June, up from $3.77/kg on 18 June to the highest level so far in 2018, according to Air Cargo News. TAC publishes weekly average general cargo prices on major global origin destination (OD) pairs based on transaction data submitted by global air forwarders active in the relevant product markets.
Forwarders are seeing the same increase in spot freight rates, noting that on some routes ex-Shanghai, rates have already jumped by US$0.80 to $1/kg, and there are signs that further increases are coming.
Rates are rising despite efforts from other carriers to supplement the market with additional capacity on routes affected by cancelled NCA flights. Yesterday during Atlas Air Worldwide Holdings’ Investor Day, Michael Steen, the company’s chief commercial officer, told investors that Atlas Air continues to operate two 747-400Fs on NCA’s behalf, as part of an earlier agreement. More recently, Steen said that Atlas was operating additional charter flights to assist NCA in upholding some of its scheduled freighter flights. When asked by an analyst if AAWW could, in the future, enhance its ACMI/CMI operations with NCA, Steen acknowledged that Atlas is always considering ways to help its customers expand their business, but did not comment on any new agreements between NCA and AAWW.
NCA’s codeshare partner Cargolux may also be prepared to offer additional capacity to stranded cargo customers, as a spokesperson for Cargolux reportedly told The Loadstar, “We will be providing assistance to NCA wherever we can.”
In NCA’s last statement, it said that it would be “at least more than another week” before the industry could expect its fleet to return to its current schedule, meaning it’s safe to assume that operations won’t restart until early July.Like This Post