Cathay Pacific Cargo expects demand to pick up ahead of the holiday season but volumes won't surge to the "super peak" level seen last year.

George Edmunds, GM Cargo Commercial, said the cargo market could see some boost from the recent move of the Hong Kong government to roll back on its quarantine restrictions for entry into the city after more than two years of strict pandemic controls.

"The market is finely balanced at the moment, with many intricate interconnected forces at play which are creating a degree of uncertainty as we look ahead," Edmunds said following the latest easing of quarantine rules in Hong Kong.

"On the positive side, we are approaching the peak, where we expect demand to pick up after the Chinese Mainland’s National Holidays. It will not be a repeat of the 'super-peak' we saw last year but we remain positive from both a Cathay and Hong Kong perspective," he added.

Cathay urge HK gov't to drop air crew restrictions 

Cathay Pacific then urged Hong Kong the gov't to drop all crew-related restrictions to further support the industry recovery.

Edmunds said the airline's operations "remain constrained" by restrictions on aircrew.

"We are delighted at Hong Kong's decision to remove quarantine for inbound passengers. This represents a significant step towards recovery for Cathay and for Hong Kong and we relish the opportunity to welcome our customers, friends and families back to our incredible home city," he said.

"While we welcome these changes, our operations remain constrained by restrictions on our fantastic crews, including limiting their activities whilst on layover overseas," Edmunds added, noting the great sacrifice and professionalism of Cathay's aircrew throughout the pandemic.

"We continue to engage with the Hong Kong SAR government to work towards the complete removal of all COVID-related restrictions for the crew – and passengers – as soon as possible," Edmunds added.

Meanwhile, the Cathay Pacific Cargo executive said the airline is working to add back passenger flight capacity gradually over time, to complement its already full freighter schedule.

He said in October, Cathay intends to add more than 200 pairs of passenger flights to both regional and long-haul destinations.

"This will firm up the consistency of our operations and enable us to be more flexible for our customers. We have also looked at the lessons from elsewhere about opening up too quickly without the resources in place, and we expect to be able to deliver more capacity and network choice without affecting the consistency," Edmunds added.

Shorter, but solid peak season expected

He then pointed out that with COVID-19 restrictions still in effect on the Chinese Mainland, manufacturing has taken a hit with the flow of raw materials interrupted and factories struggling with labour supply.

On the demand side, consumer sentiment in Europe and the United States has also been weak, not helped by rising inflation.

"This has all resulted in the summer months underperforming compared to 2021. However, we are hopeful that the local restrictions in the Chinese Mainland will start to lift, resulting in an increase in industrial output to meet traditional year-end demand, and therefore a shorter but solid peak period," Edmunds said.

Moving forward to 2023, Cathay Pacific expects capacity to remain muted out of Asia — due to pandemic controls in the Chinese Mainland — but the longer-term outlook remains positive.

"Looking further ahead to next year, we expect capacity to remain constrained out of Asia, possibly until Q2 or beyond, due to ongoing passenger movement restrictions in the Chinese Mainland, but as production and demand normalise we anticipate that the market will be relatively well balanced," Edmunds said.

"This will be at levels below those we've seen in the past 18 months, but it's worth stating that this will still be well above historical averages," he added.

Growth areas for cargo cited

Edmunds then pointed out future growth areas for cargo including its freighter operations at the new North Cargo Terminal at Zhengzhou Airport and Cathay's subsidiary —  Air Hong Kong  — cementing its previous charter services to Chengdu into its permanent schedule, as well as stretching its wings to Bahrain to connect two DHL Express hubs during the peak.

"This shows that the three C's – CKG, CTU and CGO (Chongqing, Chengdu and Zhengzhou) – retain their appeal for infrastructural investment despite the current challenges and that Hong Kong continues to maintain its status as an important export hub for DHL Express and the wider logistics community," the Cathay executive added.

He then noted that the sea-to-air operations from Dongguan to Hong Kong International Airport with built-up and customs-cleared pallets going straight to airside Hong Kong that will start in late October will also boost freight movement in the major air cargo hub.

"This option will get around some of the trucking bottlenecks in the event of further lockdowns over the border," Edmunds added.

Cathay Pacific was recently awarded the "Best Air Cargo Carrier – Asia" for three years in a row at the 2022 AFLAS Awards hosted by Asia Cargo News.