Forwarders and carriers increase China freighter capacity

3/1/2020

International freight forwarding and logistics group DSV Panalpina is poised to open a cargo air bridge between China and the US in response to backlogs and supply chain disruption resulting from the coronavirus.

Beginning 25 February, it will operate a Boeing 747-8 freighter airplane three times per week, east and westbound, between Huntsville, Alabama, in the US and Shanghai Pudong Airport.

“Due to the risk of spreading of the coronavirus (COVID-19), multiple airlines have either suspended or reduced the number of flights to and from Mainland China. As a consequence, there is an estimated 5,000 tons less capacity available per day,” the company said.

“The solution ensures that DSV will be fully in control of the capacity available on this charter solution. Taking advantage of the Huntsville hub and spoke model, we can connect all continents via our DSV controlled charter network and ensure DSV ground handling at uncongested airports. In Huntsville, express connections are available to and from Latin-American countries and Canada.”

DSV Panalpina’s EVP for investor relations, corporate marketing and communication, Flemming Ole Nielsen, told Lloyd's Loading List that the B747-8F had previously mainly been operating transatlantic services on the company’s charter network and had been replaced on that Europe-US route by a smaller cargo aircraft. “So, it (the addition of the new China-US routing) is net new capacity,” he said.

Providing an update on the impact of the coronavirus on DSV Panalpina’s China-related operations, Nielsen commented: “China is slowly moving towards normalisation, but it is still too early to call how long this will take. For both air and sea, capacity is already tight and we foresee significant capacity issues as production in China comes back. 

“Trucking capacity is severely limited across most of North, Central and West China.”

He said the company’s local subsidiary in China continued to operate under restrictions, noting: “Most of our 21 branches are open, but with limited staff in the office, while remaining staff are working from home.”

Nielsen said the company could not quantify at this stage the consequences of the coronavirus on its first-quarter (Q1) revenue and operating profit, but said it was “a very likely scenario that some activity will move from Q1 to Q2”.

Freighter ramp-up

Meanwhile, Lufthansa Cargo has told Lloyd’s Loading List that it has increased its ‘coronavirus’ freighter schedule between Frankfurt and mainland China to seven weekly round trips – which is almost half the normal schedule – compared to five in the previous few weeks.

It is now serving Shanghai with four weekly round trips, Beijing (twice-weekly) and Chengdu (weekly). “Basically, we’re managing our network flexibly in order to meet demand,” a spokesperson said.

Lufthansa Cargo’s freighter flights to the Hong Kong continue to operate according to schedule, although the Lufthansa Group has suspended passenger flights to and from mainland China until 28 March 2020.

Air charter broker Chapman Freeborn said it is in discussions with “two major forwarders” who are anticipating a rush for Europe-China-Europe freighter flights in March to cater for backlogged cargo and a surge in demand as economic activity in China gains momentum again after the constraints imposed in light of the coronavirus.

“Only time will tell if this is a rather optimistic view of how events are likely to play out in the coming weeks, as clearly the outlook remains uncertain,” the company’s head of cargo Pierre Van Der Stichele, told Lloyd’s Loading List.

Chapman Freeborn has so far organised five air cargo charter flights from Frankfurt to Beijing with B747Fs, and two from Brindisi in Italy, also to Beijing.

As reported last week in Lloyd’s Loading List, Bolloré Logistics is offering its customers a programme of close to a dozen charter flights over the coming weeks between Europe and China as a part of its ‘coronavirus impact’ contingency plans.

The first of the eastbound and westbound flights took place last week, flying between Luxembourg and Shanghai Pudong Airport, with the last flight in the programme scheduled to leave Shanghai for Luxembourg on 17 March.

Commenting on the air cargo capacity situation from Europe to China, Bolloré last week noted: “Except for Chinese airlines, all airlines have suspended passenger flights to China until mid-March. AirBridgeCargo and Cargolux have also significantly reduced their regular (freighter) schedule as well. Capacity is therefore under extreme tension and Europe-China freight rates are increasing sharply. The charter solutions offered by Bolloré Logistics successfully address this shortage.”

It said the tight capacity situation had also spread to Hong Kong and Taipei, where rates were also rising strongly.