Air freight demand weak from China: Air cargo operators

On Wednesday, big air cargo carriers stated, they dont have any immediate plans to add flights to China to replace the capacity lost midst steep cuts to passenger travel due to the coronavirus, with many factories choosing to remain closed after the annual Lunar New Year holidays.

According to aviation data firm OAG, the number of flights operated to and fro within China would drop by 25,000 flights, when compared to flights two weeks ago.

Nearly 50% of air cargo carried globally is in the belly of passenger jets rather than in dedicated freighters, said OAG. The drop in flights numbers have made the Chinese market more dependent on freight haulers.

A spokesman for Lufthansa Cargo stated, it had reduced its flying schedule, in part to allow pilots to spend the night in Novosibirsk, Russia, rather than in China. Another reason for the fall in demand could be because of the production shutdown, said the spokesman.

This shutdown represents a fresh challenge to the air freight market that was already weak before the coronavirus pandemic.

According to the International Air Transport Association (IATA), global demand fell year-on-year for 13 consecutive months through November 2019 midst the U.S.-China trade war.

“If you’re ordering people to stay in their houses it’s difficult to keep factories running,” said Daniel Roeska, an analyst at Bernstein. “Many supply chains are essentially halted, so there’s nothing to transport.”

Although air cargo represents less than 1% of global trade by tonnage, it however amounts to $6 trillion worth of goods every year, i.e. more than 35% of global trade by value, according to data from Boeing Co.

According to Korean Air Lines Co Ltd, due to the cascading impact of the coronavirus, which resulted in the fall of Chinese events, meetings, shutdowns of companies, and has led to storage and transportation shortages in fresh food shipments, such as lobster and salmon.

“On the other hand, Chinese transport and request of medical supplies such as masks and cleaning agents is increasing,” said the airline in a statement.

On the other hand, a spokeswoman for Japanese airline ANA Holdings Inc stated, there is a rise in demand for medical supplies such as surgical masks; shipments of other goods had been delayed.

Once factories in China start to hum, dedicated cargo carriers including FedEx Corp, United Parcel Service Inc and DHL are likely to be the biggest beneficiaries, said Helane Becker, an analyst at Cowen.

“Obviously the lack of belly space means everything goes on main deck,” she said, in reference to how cargo is carried in passenger planes compared with freighter aircraft.

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