Facing challenges through cooperation
As tough as the last year has been for many carriers, the rest of 2016 is not expected to be much better. Air China Cargo’s Yam lamented that, in addition to the general overcapacity issue, imports and exports have shrunk, causing continued weak demand. “The only saving grace,” he added, “is that the fuel prices remained at a relatively lower level.”
Nabil Sultan, senior vice president of the cargo division at Emirates, said that not only does the industry face headwinds from competition and weak demand but also a chilling effect from the “current geopolitical landscape and security concerns.”
To address the overcapacity and yields problems, Liu, of China Airlines, said the carrier expanded the proportion of “high-yield” freight, such as pharmaceuticals, aircraft parts and special cargo. But he has also focused on “developing relationships” with freight forwarders, integrators, brokers and postal agencies, like China Post, Vietnam Post and Malaysia Post.
This focus on cooperation is proving to be popular among the Freight 50. Etihad Cargo, for example, has worked under joint ventures with other cargo operators, such as Avianca in South America, DHL through its Bahrain hub, and Singapore via Abu Dhabi. “Working with Avianca Cargo extended our reach into the important market of South America,” said David Kerr, senior vice president of Etihad Cargo.
There may also be hope for a decent peak season. At Air China Cargo, FTKs were “better than predicted,” up 6.3 percent, y-o-y, in June, and 5.0 percent, y-o-y, for the first six months of 2016. For the second half, Yam said he remains “cautiously optimistic.”
Liu agreed that the launch of consumer electronics products may drive up seasonal demand, but he added that overall airfreight demand is anticipated to grow slowly and will still lag behind the “relatively robust” passenger side.
Cathy Pacific’s Sutch, however, remained upbeat about the peak season. The carrier, he said, is planning to ramp up trans-Pacific service from 37 flights per week to 42. The Indian market, he added, has remained strong, and China is beginning to “bounce back somewhat” after a sluggish period. “I think we need to plan for a typical peak more similar to the trend of the last five years,” Sutch predicted. “So, yes, I am bullish about a good year-end rush and confident this will make up for a tough 2016 year to date.”
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