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Air Cargo Report: More capacity comes on line, but shortage persists

RwandAir has resumed service to Europe from the capital of Rwanda. (Photo: RwandAir)

(Updated at 1:25 P.M. ET with Cathay Pacific.)

Every Sunday our Air Cargo Market Update shines a spotlight on rates and other trends influencing transportation suppliers and buyers.

This week we’re going to focus on new capacity coming into the market, mostly in the form of freighters.

All-cargo operators, including passenger airlines operating cargo-only aircraft, are experiencing record load factors and are expected to be booked solid for the remainder of the year on major trade lanes, with passenger traffic expected to be stunted by the pandemic into 2021.

Meanwhile, manufacturing in China is back to full speed after the coronavirus outbreak, e-commerce transactions are exploding, retailers are rebuilding inventories and stocking up for the holiday season, technology companies are preparing to release hot new devices, a potential COVID vaccine will need to be rushed to market in the near future and orders keep coming for coronavirus medical supplies. 

How tight is the market? Consider that freighter capacity now accounts for 66% of total air capacity on the trans-Atlantic lane, 83% on the trans-Pacific and 80% on the Europe-to-Asia lane, according to estimates provided by Brie Carere, chief marketing and communications officer at FedEx, during the company’s earnings call this week. That compares to pre-COVID freighter capacity of 33% for the trans-Atlantic, 59% for the trans-Pacific and 50% for Europe to Asia. 

Air cargo operators and logistics companies are responding to the short supply with several new offerings for shippers, making a small dent in the transport shortage businesses face. A large portion of the new equipment is devoted to the Asia market, where rates are rising again amid competition for limited cargo space.

Luxembourg-based Cargolux this week launched a weekly Boeing 747 frequency to Shenzhen, China, that will connect through Bangkok. On the return flight to Europe, the freighter will stop in Budapest. Shenzhen is China’s fourth-largest city and the 24th-busiest cargo airport in the world. Cargolux currently serves six destinations in China.

DB Schenker, the logistics arm of German railroad operator Deutsche Bahn and the third-largest global forwarder, this month launched a heavy charter operation to help Chinese exporters reach Chicago and Frankfurt. There are 10 full plane loads per week that shippers can book from Beijing, Shanghai, Zhengzhou and Hong Kong to Chicago and Frankfurt.

That is the type of capacity that technology companies such as Apple, Microsoft, Sony and Samsung could tap for new product releases this fall. It could also be in demand by pharmaceutical companies trying to rush a COVID-19 vaccine to market once regulators approve a drug.

The long-term program, which uses Boeing 747 freighters provided by airline partners, will operate beyond 2020, spokeswoman Kelly Chen said. 

The Global Flight Operations Program connects Shanghai and Frankfurt three times a week, Beijing and Frankfurt once per week, Zhengzhou and Frankfurt once per week, Hong Kong and Frankfurt twice per week, and Shanghai and Chicago three times per week. DB Schenker also offers partial charters, connecting Hong Kong to Frankfurt twice a week, Hong Kong to Los Angeles three times per week and Hong Kong to Chicago once per week.

DB Schenker expects to rent 1,500 flights this year, up from about 1,200 private flights it normally arranges.

Another German company, forwarder Dachser, this month launched a charter service between Hong Kong and Frankfurt through the end of the year with Boeing 747-400 aircraft. The underlying service is through Magma Aviation, which itself markets the capacity and contracts with outside carriers to fly its aircraft.

SWISS said it reopened the route between Zurich and Delhi for cargo-only flights. The flights are being operated once a week with modified Boeing 777s.

Cathay Pacific on Sept. 21 began a 12-week program of scheduled cargo flights from Hong Kong to Pittsburgh International Airport through Nov. 26, using 777-300 passenger planes modified without seats .

RwandAir said Friday it will resume flights to and from London and Brussels to Kigali, Rwanda, beginning Oct. 3 after travel bans and restrictions were relaxed. The flights, using Airbus A330 twin-aisle aircraft, will initially be twice a week, increasing to three times weekly beginning Oct. 25.

As it resumes European services, the African carrier will switch its U.K. operations from London Gatwick to Heathrow for the first time. 

RwandAir has been operating temporary passenger freighters from London Heathrow during the pandemic, as well as freight-only flights to China to gather medical supplies and other essential cargo. 

Air Lease Corp. said it has delivered the first of four new Airbus A350-1000 aircraft on long-term lease to Virgin Atlantic. The planes will replace Virgin’s 747 fleet on routes from London across the Atlantic. Virgin abruptly retired its seven B747s in May as part of its effort to improve efficiency and save cash as the pandemic battered its finances. 

Qatar Airways continues to bring back cities to its passenger network. Between now and early October, it plans to resume service to Amman, Jordan; Entebe, Uganda; Hanoi, Vietnam; Seychelles; and launch new service to Accra, Ghana. 

British Airways said it will begin flights from Heathrow to Lahore, Pakistan, four times a week starting Oct. 12. The flights will be with Boeing 787-8 widebody aircraft.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch. Contact: [email protected] Twitter: @ericreports


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Eric Kulisch

Eric is the Supply Chain and Air Cargo Editor at FreightWaves. An award-winning business journalist with extensive experience covering the logistics sector, Eric spent nearly two years as the Washington, D.C., correspondent for Automotive News, where he focused on regulatory and policy issues surrounding autonomous vehicles, mobility, fuel economy and safety. He has won two regional Gold Medals and a Silver Medal from the American Society of Business Publication Editors for government and trade coverage, and news analysis. He was voted best for feature writing and commentary in the Trade/Newsletter category by the D.C. Chapter of the Society of Professional Journalists. He won Environmental Journalist of the Year from the Seahorse Freight Association in 2014 and was the group's 2013 Supply Chain Journalist of the Year. In December 2022, Eric was voted runner up for Air Cargo Journalist by the Seahorse Freight Association. As associate editor at American Shipper Magazine for more than a decade, he wrote about trade, freight transportation and supply chains. He has appeared on Marketplace, ABC News and National Public Radio to talk about logistics issues in the news. Eric is based in Vancouver, Washington. He can be reached for comments and tips at [email protected]