Qantas Freight is eager to avail itself of opportunities arising from unfettered access to the Chinese market, following the open skies agreement that the governments of China and Australia signed in December.
“The Australia-China Air Services Agreement lays the foundation for long-term growth in the Australia-China aviation network, at a time when the Qantas Group has its biggest ever presence in the market,” said Alison Webster, executive manager Qantas Freight, catering, Australian airports. “In the past few months Qantas launched a new passenger service to Beijing, extended the partnership with China Eastern and we’ve signed new deals to help Australian exporters grow their business in China. We’re looking forward to exploring more opportunities to unlock Chinese trade in 2017. She added that new free trade agreements with China, Japan and South Korea will open up these markets to more commodities.
Qantas has also been seeking government approval for a weekly freighter service to Ningbo. The operation, which started on a charter basis, uses the carrier’s sole Boeing 767 freighter, which usually plies the trans-Tasman sector, to fly milk from Hobart to Ningbo for one major client.
“We are working closely with this customer on their demand profile going forward,” Webster said. “China continues to be an important region for us,” she added.
Chinese appetite for fresh agriculture products has Australian meat, seafood and produce exporters salivating. Last autumn Cathay Pacific announced a weekly freighter service from its Hong Kong base to Brisbane – to the chagrin of Qantas. Perishables exporters argued that lift to China was insufficient, but the Australian airline has argued that demand on the route is subject to significant seasonal fluctuations, which undermines the viability of a regular freighter service.
In January Qantas launched a daily passenger service between Sydney and Beijing, utilizing Airbus A330-200 aircraft. It is the carrier’s third passenger destination in China, after Hong Kong and Shanghai. It is upgrading its passenger fleet, having ordered eight 787-9 Dreamliners, which started arriving late last year.
In addition to growing bellyhold capacity to Chinese gateways and the 767 milk run to Ningbo, Qantas offers regular maindeck lift to China on the two 747-400 freighters it has leased. These follow the “kangaroo” route, a triangular routing that sees the freighters take Australian exports to China, where they load up with goods destined for the US market, whence they return back to base. This translates into four weekly trans-Pacific all-cargo services, one of which has been calling at Dallas/Fort Worth since last year.
Webster signalled that she is happy with the current fleet mix and operation.
“The international freighters allow us to provide main deck capacity on key lanes in the Asia/Pacific region. We are comfortable with the capacity that we currently have and are always monitoring demand carefully to ensure that we maximize our offer,” she said.
Despite this and the placement of a large chunk of its fleet under contact with Australia Post, Qantas Freight has been buffeted by economic headwinds. In the six months to December 31, 2016, it reported underlying EBIT of A$27 million (US$19.97 million), down 28.9% from a year earlier. Management commented that freight conditions remained challenging worldwide, but there were signs of stabilization and Qantas Freight was well placed.
“We’re still seeing lots of new cargo capacity entering the international market to and from Australia, so competition is strong. That said, we’re finding that many of our customer conversations go well beyond price, and many of our customers are really focused on being great partners and together providing an efficient, reliable supply chain,” Webster said.
Forwarders see another issue that needs improvement. Transits through Sydney’s Kingsford Smith International have been a headache for some time. According to Peter Andrews, state manager, Victoria at International Trade Management, they can add a day in transit time for international shipments coming through the airport.
“Some shippers request to avoid transit in Sydney. It can be faster to ship to Melbourne via the Middle East,” said Graham Burford, chief commercial officer of American Worldwide Agencies, a Los Angeles-based cargo agent that specializes in the South Pacific.
Some operators hope that Sydney’s second airport, which is slated to come on stream in the mid-2020s, will bring relief to overburdened Kingsford Smith. Webster noted that unlike the existing airport, the new site will not have a curfew, which could bring some exciting possibilities for air freight.
Nearer term she is looking at her outfit’s product portfolio. “CEIV for pharma is something we are reviewing as this product is growing quickly in the region,” she noted.
By Ian Putzger
Air Freight Correspondent | Toronto