The surge in air cargo demand is expected to continue this year and next, but industry players are also faced with persisting capacity constraints amid Covid-19-related restrictions and the lack of regular bellyhold space.

Cathay Pacific said it has ramped up its freighter schedule “up to peak season levels” as of late August, which has traditionally been a quieter month for cargo citing “buoyant demand.” The Hong Kong-based carrier noted that its trans-Pacific flights increased to 39 flights per week.

“In line with annual practice, we have ramped up our trans-Pacific schedule from August to December. Recently, we added two additional ‘preighters’ to our fleet, bringing the total to six. We continue to operate many hundreds of cargo-only passenger flights across our network to address our customers’ needs for space and compensate for the loss of current belly space in the market,” Tom Owens, Cathay Pacific’s head of cargo, told Asia Cargo News.

Commenting on the lack of air capacity out of Hong Kong and Shanghai, which has sparked peak season concerns, Owens noted that Cathay Pacific Cargo currently operates six freighter flights per week to Shanghai from Hong Kong, supported by cargo-only passenger flights and regular frequencies by the airline’s subsidiary cargo carrier Air Hong Kong. 

Relieving pressure on Shanghai

“Operations have been impacted like many other carriers by the additional ground time required in Shanghai right now, and we have been working closely with local ground and cargo terminal handling company to make them as smooth as we can,” he added.

“We are operating additional flights between Zhengzhou and Hong Kong in order to relieve some pressure on Shanghai and support our customer needs.”

Owens noted that the start to the peak season has seen good demand across Cathay Pacific’s network – with space to the U.S. and India “particularly in demand” at the moment. 

“We expect robust cargo demand with constrained global air freight capacity to continue into the first quarter of 2022,” he continued, adding that the uncertain operating environment has continued this year, with lockdowns and tightened quarantine restrictions limiting passenger belly capacity. 

“After this the supply dynamic depends on how quickly wide body capacity returns to pre-Covid levels as well as resolution of the other bottlenecks to trade, including the constraints around sea freight,” the Cathay Pacific Cargo chief said.

‘Strongest peak season’ expected

Separately, Maersk said in its latest Asia-Pacific market update that fourth quarter air cargo volumes would surpass 2019, to be “one of the strongest peaks the industry has seen.”

Aside from staffing concerns at major Chinese airports persisting for several weeks – most notably at Shanghai Pudong – the container line said high demand for air freight is also creating capacity constraints.

It said Japan’s main airports of Tokyo Narita and Osaka Kansai have seen strong air cargo volumes in the past two months, “due to disruption in ocean shipments.” Kansai posted a 20.2% increase in air cargo in August, compared with 2020.

“South Korean airports saw a 26.7% year-on-year volume increase in August, driven mostly by automotive shipments to the U.S., China and Vietnam. As a ripple effect from additional airfreight disruption in China, rates in Korea and Japan are increasing rapidly,” Maersk added, noting that Indonesia and the Philippines also saw strong export demand combined with reduced airline operations, resulting in tight capacity and elevated rates to the U.S. and Europe.

“Several airlines have reduced or cancelled flights from Jakarta. We expect air capacity will be constrained for the rest of the year,” Maersk noted. And regarding Vietnam, Cambodia and Myanmar, it added: “Rates are high and space extremely tight in the three countries, due to strong demand and cargo delays at Asia airfreight hubs, with trans-Pacific services the most critical.”

Zero-tolerance Covid-19 policy 

Logistics analyst project44 said the “unprecedented demand for Chinese and Asian goods ahead of the holiday shopping season is the main driver of this supply chain pandemic reality.”

“The supply side is crippled by China’s zero-tolerance Covid policy that has seen them close major export port terminals and hault airport operations if one single Covid case is detected among staff,” Josh Brazil, project44’s Rostock, Germany-based vice president for data research, told Asia Cargo News.

“These major disrupting events have become the norm this year. In response, shippers have actually increased orders to try to get ahead of the holiday rush resulting in even more demand, more congestion and even higher shipping rates — a vicious circle of supply chain instability,” he added. 

The project44 analyst noted that in the U.S., many warehouses are “full” but now a shortage of truck drivers and chassis is also preventing getting those goods to their last-mile destinations.

“It truly is a perfect storm,” Brazil said.

By Charlee C. Delavin

Asia Cargo News | Hong Kong