While the Asia-Europe and Asia-North America trade lanes may grab most of the headlines, airline representatives say that Asia-Latin America routes are quietly gaining importance, particularly with regard to goods being shipped from Asia to the Americas.

John Cheetham, regional commercial manager of the Asia Pacific and India at IAG Cargo, says that the Asia-South America market has performed strongly over the last year.

“It’s one of the fastest growing markets, in spite of some of the challenges to key economies in the region,” he says. “Brazil is leading the way from a demand perspective and São Paulo, in particular, is a very strong route. However, we see significant demand to Bogotá, Caracas, Buenos Aires and Mexico City as well.”

Representatives of Air France-KLM-Martinair Cargo say that an average of about 6,000 tonnes in chargeable weight of cargo is being carried in this market. The month of October was particularly noteworthy, with 7,300 tonnes. March, April and May produced better figures than last year as well.

Air cargo has also done well for freight forwarder SDV. “Imports into Latin America have remained at strong levels, even though the progression of this past year has been modest,” says Tony Rodrigues, CEO of SDV Americas. “Imports from Asia remain the fastest growing sector of air freight in Latin America.”

But not everyone has been experiencing such positive performance. “The market this year has been flat or slightly decreasing in comparison with previous years,” says Andrés Bianchi, commercial senior vice president for North America and Asia at LAN Cargo.

Major airports in Brazil are the busiest for cargo travelling between Asia and South America. Wenjun Li, senior vice president and head of air freight at DHL Global Forwarding Asia Pacific, says that the busiest destination in South America from the Asia-Pacific region is Viracopos International Airport near São Paulo, while the busiest point of origin to Asia is Guarulhos, another airport serving the São Paulo area.

Other main airports for Asia-bound cargo are San José, Costa Rica; Lima; Bogotá and Buenos Aires.

“These airports handle a variety of commodities from perishables to finished goods bound for China, Korea, Japan, Taiwan, Singapore and Malaysia,” Li says.

On the other side of the Pacific, Hong Kong is the undisputed leader in terms of South American cargo, followed by Shanghai (Pudong), Seoul (Incheon), Beijing and Tokyo (Haneda and Narita).

“The reason they continue to be the busiest airports from Asia into South America is because these are all major gateways with a large percentage of their capacity being for direct service, or transshipments via the US,” says Michael Yip, vice president of air freight for the Transpacific Trade Lane at CEVA Logistics.

There are no direct flights from Asia to South America. Cargo travelling between the two continents is typically routed through at least one or two different airports.

The most popular transit point by far is Miami, which serves 43 destinations in Latin America – including 29 in South America – according to the airport’s official website.

“Miami is one of the most relevant transit gateways for cargo going to Latin America because the biggest capacity uplift is deployed here,” says Bianchi. “Additionally, Miami has a unique geographic location and combined passenger and freighter capacity.”

He adds that European airports such as London Heathrow, Madrid, Amsterdam and Frankfurt are also good transit stops, but they only offer limited capacity in terms of dedicated freighter aircraft, whereas Miami offers four, five or even six weekly departures to all the main cities in South America, making transit times very attractive and competitive for all kinds of commodities.

Meanwhile, a new set of hubs is emerging in the Middle East, where Emirates, Etihad Airways, Qatar Airways and Turkish Airlines are rapidly growing and changing the landscape of the global aviation industry.

“We currently operate flights to São Paulo and Rio de Janeiro, as well as a freighter service to Viracopos. We also have flights to Buenos Aires, and a freighter service which we launched in 2013 to Quito, with connections to Europe,” says Duncan Christopher Watson, vice president of cargo for the Americas and Central and Southern Africa at Emirates SkyCargo. “We’re a market- and customer-oriented carrier and will deploy capacity where demand resides and will add capacity if we can facilitate trade.”

One interesting aspect of the airfreight market between Asia and South America is the fact that there is more cargo going into South America than there is leaving it.

“Without a doubt, traffic is significantly more robust from Asia to South America than from South America to Asia,” says Carmen Taylor, managing director of cargo sales for Mexico, Central and Latin America at American Airlines. “Consumer goods manufactured in China and Southeast Asia continue to flow into the Latin American continent.”

Li says that DHL has been experiencing a similar situation. “The tonnage of cargo from South America to Asia is approximately 35% of that from Asia into South America. There’s a still a big gap between the imports from Asia to South America and the exports from South America, with many countries relying heavily on imports from Asia,” he says. “However, we do see more cargo from South America to Asia, as the growth of the South America market is being driven by intra-Latin America and US-Latin America-US trade.”

The contrast is even starker for CEVA. Juan Carlos Serna, CEVA’s vice president of airfreight products for Latin America, says that the market continues to show an imbalance, with primarily import-driven flows into the region from the Asia-Pacific.

“Asia to South America accounts for around 80% of the market while South America to Asia accounts for close to 20%. This is very much triggered by volumes in the technology sector and consumer and retail,” he says. “However, it’s important to highlight an interesting growth of export volumes from South America, especially in the perishable sector where, for example, the Colombia-Japan flower market is an interesting case in point.”

The imbalance can affect airline planning too. “Trade flows and commodities play an important role,” says Ravishankar Mirle, vice president of cargo for the Far East and Australia at Emirates SkyCargo. “Depending on the desired traffic mix, we may choose not to select a specific origin-destination pair due to yield and cost considerations.”

The types of cargo being carried from in the two directions are very different, according to airline companies such as American, DHL, IAG, Emirates and Lufthansa.

Exports being flown into South America from Asia tend to include high-tech electronics, automotive and engineering components, industrial machinery and pharmaceutical products, whereas the exports going to Asia are usually raw materials, commodities and perishables such as fruit, vegetables, meat and flowers.

The Asia-South America air cargo market is not an easy one to serve.

“Given the very long distances and extremely high operating cost on this trade lane, any successful carrier must have modern, fuel-efficient aircraft, a robust and cost-efficient infrastructure on both sides, a reliable hub via which to transit, and a good standing with customers in the markets on both sides in order to fill the aircraft to a very high load factor,” says Frank Beilner, regional director for Southeast Asia and Australia at Lufthansa Cargo. “Also, due to high customer demands and, in the case of perishables, often delicate products on board, this lane requires a dedicated, professional cargo carrier to achieve a logistics quality that will satisfy the customers.”

The main challenges for DHL are in the routing of flights, the disparity between inbound outbound volumes and the capacity management of high-tech products according to high and low seasons, according to Li. “To strengthen the freight network, it would be good to have bilateral agreements between countries to drive more trade, especially out of South America,” he says.

For Emirates, one of the difficulties is inconsistency, says Mirle. Another is the fact that cargo tends to be volumetric, which is not always a good thing for his company, he says.

One other hurdle is not so much a difficulty as a necessity – respecting and adhering to the local laws and regulations.

“This means that we understand the investment which we as a carrier must make to ensure all of our procedures reflect the needs and laws of each country,” says Taylor. “We do not consider these as challenges or difficulties; we simply understand the efforts and resources needed and work hard to deliver our products and services accordingly.”

Despite the challenges, carriers and forwarders alike are optimistic about this market.

“I think the growth potential is excellent. These economies will develop over the medium term at a fast rate,” says Cheetham. “Historically and culturally, there has always been a strong connection between our Iberia business in Spain and South America. This puts us in a leading position to service the growth in this market on the IAGC network.”

He adds that IAG is constantly reviewing its routes to look for opportunities. “Montevideo, Uruguay, is a relatively new route for us and we look forward to further expansion in terms of routes and capacity over the coming years as our fleet renewal programme continues,” he says.

Beilner also says that because there are emerging economies on both sides of the trade lane that are “nowhere near the end of their development paths,” he is convinced that this lane will continue to grow in volumes for Lufthansa Cargo, which is why he is already looking ahead.

“LH Cargo already connects 33 airports in Asia and the Middle East with 12 airports in South America via a single transit in Frankfurt. With the addition of five Boeing 777F aircraft to our fleet, we have also embarked on securing a modern, future-oriented operating platform,” he says. “Therefore, we are looking forward to participating in the growth on this lane by continuing to serve our customers with good quality at a competitive cost.”

Air France-KLM-Martinair is cautiously hopeful. “Primarily, it has to be carefully studied and considered before going forward in the decision of launching of a new route,” say its representatives. “Taking such a decision must imperatively prove its cost effectiveness.”

By Jeffrey Lee

Staff Writer | Hong Kong