Ex-China air freight capacity now higher than last year

5/14/2020

Overall outbound air cargo capacity from China was up 6% last week on 2019 levels although air freight capacity from China remains highly constrained, as demand for shipments of Personal Protective Equipment (PPE) continues to boom, according to the latest COVID-19 operational update yesterday from freight forwarding and logistics group Agility.

The forwarder noted that all mainland China export markets were “under tremendous pressure” as production resumes and passenger flight cancellations are sustained, despite the fact that total overall outbound air cargo capacity from China – maindeck plus belly cargo capacity, to all regions – has apparently risen to pre-crisis levels, mainly through massive increases in freighter capacity deployed to serve the huge demand for capacity ex-China, and the corresponding very high freight rates.

Agility said a “trend of ocean-to-air conversions” was currently also exacerbating pressure on capacity outbound China, although “more freighters are entering the market”.

Agility also highlighted that Shanghai Pudong Airport (PVG) is reporting extremely heavy congestion on feeder roads, parking lots, and cargo terminals. Entry to terminal facilities can take 36 to 40 hours. Trucks are not allowed to unload outbound cargo until 48 hours prior to scheduled flight departure.

Global capacity fall

But for a second consecutive week, global air cargo capacity was 29% below levels for the same week in 2019, the update noted, quoting data from analyst Seabury.

Transpacific capacity was 4%-6% lower than 2019 levels, while transatlantic capacity was down more than 50% from year-prior capacity levels.

Global widebody belly capacity increased 23% last week, compared with the previous week, largely as a result of passenger aircraft being converted into all-cargo mode; but it remains 78% below 2019 levels.

Freighter (+20%) and express freighter (up +16%) capacity were up last week versus 2019, but not enough to compensate for the belly space that has been taken out of the market, Agility added.

Forwarder capacity programmes

Alongside increases in scheduled airline cargo capacity, in the form of freighters and passenger aircraft operating on a cargo-only basis, a number of freight forwarders have set up their own programmes.

Bolloré Logistics has extended its programme of freighter charter flights between Europe and China into May as a part of its ‘coronavirus impact’ contingency plans.

It is offering customers air charter solutions on around 30 flights this month, originating in Shanghai, Zhengzhou and Guangzhou and bound for Luxembourg, Paris Roissy-Charles de Gaulle, Liège and Frankfurt Hahn. The flights are operated Cargolux, Qatar Airways Cargo, Silk Way West Airlines and CAL Cargo Airlines.

Bolloré is also offering customers Europe-China air charter solutions with Silk Way West Airlines operating a schedule of four flights in May between Luxembourg and Shanghai.

Last week, DB Schenker announced it had set up ‘The China Shuttle’, a daily air cargo connection between Shanghai and Munich, using three Boeing 767 passenger aircraft from Icelandair converted into all-cargo mode, in response to strong demand for PPE.

Initially, 45 flights are planned this month and further connections, for example, twice a week to Chicago, are also in preparation, the company said

Meanwhile, in its latest COVID-19 update, Kuehne + Nagel said the continuing global demand for PPE out of China has further increased the pressure on freighter capacity.

“At the moment we are seeing congestion up to four days across various airports in Greater China. In addition, China has further reduced the number of international passenger flights as part of its COVID-19 prevention and control measures,” it said.

Chinese checks

K+N underlined that shippers need to provide declarations (written or electronic) that they have obtained China’s medical device product registration certificates for their export shipment and that the medical supplies are compliant with the quality standards of importing countries/regions. It commented: “The increased inspection rate by the Chinese customs could lead to delays in the export process of shipments.” 

Agility’s update also noted an “unprecedented” rate surge on intra-Asian lanes due to a “massive” capacity reduction resulting from passenger flight and freighter cancellations which in turn is “constraining the long-haul export capacity to both Europe and the US.

The export market from Hong Kong to Europe and US is “picking up gradually” with a “sharp” increase in rates.