More freighters hunt for loads across the pond

The North Atlantic seems to be an unlikely arena for new freighter services, but maindeck lift between Europe and North America is on the rise, thanks to several operators.

In July, Qatar Airways boosted its footprint in the trans-Atlantic market with the launch of new freighter flights to New York and Halifax. The Middle Eastern carrier serves the new destinations in its network twice weekly with 777-200F equipment out of its European hub in Luxembourg. Halifax is a new destination for the carrier, supplementing passenger flights to Montreal. The Big Apple already has twice-daily passenger flights by Qatar Airways since the addition of a second daily service in March. The new routes were launched on the heels of the arrival of Qatar’s tenth 777 freighter, which brought its all-cargo fleet to 20 aircraft altogether.

But that’s not all. A new player will enter the market in November, planning to operate twice a week between Munich and the Greenville-Spartanburg area in South Carolina. This operation, which will be managed by German forwarder, Senator International, is to provide dedicated lift for traffic of German car manufacturer BMW to the southeastern United States. According to Senator, the choice of aircraft type on the new route will hinge on the selection of the operator, which is expected to be announced before September. The new freighter will consolidate flows of BMW that are currently going through several U.S. airports.

Still more trans-Atlantic maindeck capacity is poised to enter the market before the end of the year, courtesy of CargoLogicAir, the recently launched offshoot of Russian carrier Volga-Dnepr in the U.K. CargoLogicAir, which took delivery of its first 747-8 freighter in mid-July, intends to mount flights across the Atlantic once its second freighter joins the fleet. The operator is still awaiting a Foreign Air Carrier Permit from the U.S. Department of Transportation, but the authority granted it an exemption in July to run scheduled as well as charter flights between points in the U.S. and Europe.

The new capacity is not exactly setting forwarders’ pulses racing. “You would think the management at these carriers are forecasting a resurgence in air cargo growth on the trans-Atlantic. I would hope that is to be the case but I certainly don’t see it coming any time soon,” remarked a senior U.S.- based executive of a multinational forwarder headquartered in Europe.

The strong dollar has helped with westbound flows across the Atlantic, but carriers have been struggling to fill their planes in the opposite direction. According to IATA, North American airlines suffered a 2.3 percent decline in demand in the first five months of this year. Figures from WorldACD show a 5.5 percent rise in bellyhold capacity between Europe and North America, whereas demand dropped 1.5 percent. “There is overkill on the North Atlantic,” commented Jerry Levy, vice president of marketing at forwarder OIA Global. “If these freighters come in with BMW cargo to South Carolina, that is going to create some interesting space on the return leg.”

One indicator of the dire situation for carriers on the eastbound sector is the fact that European airlines regularly load North American exports headed for South America on those flights, bouncing them back across the Atlantic from their hubs. Joe Lawrence, president of general sales and service agent Airline Services International, said that their rates are lower than prices on direct flights from Canada to South America. The yield pressure on European airlines is illustrated by double-digit cargo revenue declines at Lufthansa and IAG in the second quarter.

Lufthansa and Air France-KLM, which also suffered a net loss in cargo in the second quarter, have both taken freighters out of service. The executive of the European forwarder remarked that new freighter operations have taken traffic from other points rather than meet fresh demand – both across the Atlantic and to Asia.

“What I do see is a very poor charter market and comparatively low prices. I think that helps to explain the growth in freighter activity into Rickenbacker Airport in Columbus for the garment business and this new service into Spartanburg for BMW. No doubt, these specialty flights help to siphon off traffic from the traditional hubs,” he reflected. “I’m not expecting demand on the trans-Atlantic to absorb a lot of new capacity. Our approach to procurement is to support a core group of carriers with committed tonnage. Overflow can go to new entrants and specialty carriers. At this time, we are not seeing any capacity shortfalls with this core group and our forecasts don’t indicate there will be much, if any, overflow to share with other airlines. We’ll watch to see how this develops,” he added.

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