Views: 41 Author: Site Editor Publish Time: 2022-01-20 Origin: Site
The new coronavirus (COVID-19) pandemic has proven to be a major problem, but it is also a boon for the air cargo industry. Due to the lack of containers due to the burst of shipping, cargo owners consider air transportation instead of transportation, but the reality is not easy to be optimistic.
Although the global freight capacity has decreased by 20% compared with 2019, since February 2020, the price per kilogram in all markets has risen sharply. Air freight is still high.
Lost cargo capacity
The air cargo before the epidemic was composed of two cargo parts of the same scale: cargo transportation on a dedicated cargo plane and in the belly compartment of a passenger plane. Over the years, these two parts have proven to be equally important and needed. With the new coronavirus pandemic, airlines cancelled passenger flights and hundreds of planes were forced to park indefinitely. As a result, the usable passenger plane's belly-carrying capacity was reduced by 80%.
As demand greatly exceeds supply, the market is quickly affected, causing transportation costs to rise to the highest point in the past five years. The Hong Kong-North America region has the most serious capacity loss, with prices rising from US$3.19 per kilogram to the highest US$7.73. Although it seems that the price spike is due to rising costs, this is not the case.
In mid-April 2020, the jet fuel price index showed a half-year drop of more than 135 points. Due to the minimal fluctuations in labor costs, oil prices have reached the lowest point in history, and other costs have remained unchanged, the substantial increase in transportation prices means that freight dedicated line carriers have obtained considerable profits.
Will it continue to be profitable after the epidemic?
Up to now, the air freight cost of some routes is still more than 60% higher than the same period last year. According to such data, the business may not be able to sustain for a long time. After a full economic recovery, the removal of travel restrictions, quarantine requirements and other measures to prevent the spread of the new crown virus, the airliner will return to the blue sky. As a result, there will be a large influx of capacity in the market, which will push costs down to pre-epidemic levels.
Air cargo carriers must take the current air transport seriously, because although the current success is still amazing, as each epidemic hotspot is controlled, such opportunities will become less and less. The profits gained from the epidemic situation must be used to achieve long-term goals and invest in infrastructure and equipment to ensure sustainability and reduce the aviation industry’s environmental impact.
Air freight market by continent
The market continued its mid-season performance. The price of TPEB has remained high and stable. The performance of China and Southeast Asia is far above average. Capacity is scarce, and because airlines are committed to increasing revenue in the fourth quarter to a greater extent, air freight prices have always been at the highest point.
Due to the tight capacity, the price of FEWB has also increased.
It is expected that this price level will continue to be maintained during the peak season before the holidays.
Market conditions in Europe are similar to those in previous weeks.
The transatlantic westbound route (TAWB) has tight space and the price has been high. In particular, the prices from Europe to San Francisco International Airport (SFO) are the highest, and prices at JFK and Los Angeles International Airport (LAX) have also increased.
The far east-west Nordic route (FEWB) is under great pressure, and prices from Hong Kong to Europe continue to rise. But prices from Shanghai Pudong International Airport (PVG) to Europe remain high.
When planning the transportation time, delays in transportation and ground handling should be considered.
The demand for the transatlantic eastbound route (TAEB) and the supply of space have been balanced, and there has been no surge. The load factor from Los Angeles International Airport (LAX)/Chicago O’Hare International Airport (ORD)/Kennedy International Airport (JFK) to hubs in Central Europe remains high. A small number of passenger carriers put in new capacity on specific routes.
The revenue of the Trans-Pacific Westbound Route (TPWB) is still under pressure, and the supply of space exceeds demand, especially at Hong Kong International Airport (HKG)/Shanghai Pudong International Airport (PVG)/Incheon International Airport (ICN).
The Latin American Trade Route (LATAM) saw a surge in demand. The northbound trade routes of Latin America have increased the export of fresh goods, and the southbound trade routes have increased the export goods and transshipment goods from the United States, but they are still in a state of insufficient space.