Air cargo charter demand remains sky high

4/17/2020

Air cargo charter demand remains sky high, particularly between China and Europe, and is likely to remain so throughout April, with rates around double the normal rate, according to a leading broker.

Chapman Freeborn’s head of cargo, Pierre Van Der Stichele, told Lloyd's Loading List in an interview: “There are currently lead times of 10 days to secure a wide-body freighter such as B777 or a B747 when normally it would be one to two days. It’s a case of ‘if you blink you’ve lost the plane’. Opportunities are limited and windows close very quickly.”

He continued: “95% of the enquiries we are getting at the moment are related to COVID-19. We’ve had a few enquires related to flights for perishables and imports of fresh produce to certain countries are likely to suffer as all of the available of capacity is being reserved for the pandemic relief effort.

“We don’t have a crystal ball and don’t know how long these flights are going to last. It all depends on how the virus evolves. Listening to the news you have the feeling the lockdown could go on for a couple months in Europe, which means sustained demand for face masks will continue.”

Van Der Stichele highlighted how earlier this year market conditions for aircraft changed dramatically as the coronavirus crisis began to unfold.

“It seems quite some time ago now but January-February 2020 wasn’t a good period for the air transport industry and a number of airlines had parked aircraft because of oversupply. Then passenger airlines stopped flying to China. This was followed by the Trump administration’s travel ban on Transatlantic routes. The overall result was an enormous amount of belly cargo coming out of the market.”

Over the past month, Chapman Freeborn has organised approximately 90-100 ‘corona-related’ freighter charter flights, Van Der Stichele revealed. “I would say roughly 80% of the flights are operating on China-Europe routes. There are some China-US flights too and we are also starting to see China-South America and China-Africa flights as well.”

He also noted the growing contribution of passenger aircraft in helping maintain the ‘healthcare cargo airbridge’ between China and Europe.

Chapman Freeborn’s sister company, narrow-body ACMI operator, Avion Express, has dedicated five A321s to carry urgent medical supplied on these routes. The first flight was scheduled to operate yesterday between Shanghai and Vilnius, in Lithuania and the next flights are planned to fly from China to Portugal and Frankfurt and possibly Stockholm.

“Looking at the booking sheet, a flight is scheduled for every two or three days but it may well be that it is every day,” he noted. “It’s ad hoc – whatever they can fit on an airplane. Every major carrier is doing this. It takes five to seven days to obtain a permit from the Chinese authorities before  can depart with cargo. A lot of paperwork and diplomatic support is required to get these pax-cargo flights operating.”

Sustained strong demand for cargo solutions is also reflected in charter rates, Van Der Stichele underlined:

“If you take as a ballpark example, a B777 or B747 that will take a 100 tonnes of cargo, at any time other than prior to Christmas, such as March or April, for example, a round-trip from Europe to China and coming back with e-commerce goods and general cargo, say, would cost in the region of $470,000. Now it’s anything between $850,000 and $1 million.

“Is such a price justifiable in the present context? It really is difficult to say whether it is right or wrong. A lot of the carriers doing the cargo charters also have passenger activities and let's not forget that they have had to furlough a lot of their staff. It's all about survival for airlines at the moment. They need to make money to pay their people.”

Post-COVID-19, a shortage of air crews could become a factor, Van Der Stichele said:

“Some pilots of pax aircraft are sitting at home having already been out of the cockpit for several weeks and are set to lose the currency of the licence to fly the type of planes that they do normally do,” he noted. “They’re going to need refresher or re-training courses in order to re-qualify for a licence and there could be a lag of several weeks before they are ready for service which would obviously affect bellycargo capacity coming back into the market.”