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Forwarders step up bookings as air cargo traffic soars
With the surge in volume, forwarders are lining up capacity for the peak season, but some are wary, fearing a slowdown in growth.Correspondent Ian Putzger reports Prodded by the robust resurgence in traffic since last autumn, forwarders have begun to line up capacity for the coming peak season, but others are holding back, troubled by indications of a possible slowdown. The waiting game is not without risk, given a lack of capacity to soak up a surge in demand. According to statistics from the International Air Transport Association (IATA), air cargo volume on a global basis soared 34 percent in May, which pushed the total above pre-recession levels. Airlines from the Asia-Pacific region were in the forefront of the ongoing recovery, clocking up 38.7 percent more volume in May than 12 months earlier. By the end of June, Hong Kong International Airport had left the slump behind. Its throughput for the first half of the year was some eight percent above its tally for the same period in 2008, before the downturn set in, remarked Rupert Hogg, director and general manager of cargo at Cathay Pacific. "The cargo business is currently absolutely booming," declared Stephan Gemkow, chief financial officer of Lufthansa Cargo, adding that China has been a major factor in this development - both in terms of imports and exports. Inbound volume was up 34.1 percent in June, while exports advanced 43.9 percent. Large forwarders have already lined up charters to meet additional lift requirements. DB Schenker is planning to add a second weekly freighter flight to its US hub in Ohio and is examining the possibility of going up to three weekly frequencies later on, said Steve Dearnley, chief executive officer of Schenker Asia-Pacific. Rival DHL Global Forwarding has been running twice weekly freighter flights from Asia to Chicago and Atlanta. In light of the economic wobbles in Europe, Dearnley sees the strongest demand in the transpacific sector. To Europe, Schenker is planning to meet demand with "sizable block space agreements". "Almost all of our strategic partners have come to us asking for increased allocations/BSA's exit Asia for the months of September, October and November," said Neel Shah, vice-president of Delta Cargo. However, many forwarders are still hesitating to sign capacity commitments, one transpacific freighter operator remarked privately. Their wait- and-see attitude is driven by concerns over how strong the coming peak will be. Shah reckons that there will be a peak season, but less pronounced than in 2009. "We will see a peak, but not a mega-surge as last year," agreed Dearnley. The momentum of growth since last September is not sustainable, he said, adding that there are signs already of growth levelling off. "There are some indicators pointing to things slowing down a bit, but the question is how slow," said Kevin Cummiskey, director of cargo for the Americas at Asiana Airlines. Predictions are hard to make, given the complexity of the issue and the number of factors, he added. One signal of concern has been a decline in US retail spending in June, which dropped 0.5 percent. It marked the second consecutive month of decline, following a 1.1 percent drop in may. The International Monetary Fund raised its forecast for global economic growth this year from previously 4.2 percent to 4.6 percent, but warned that the risk of a slowdown had gone up sharply due to concerns over the impact of sovereign debt and budget imbalances or economic recovery in Europe and North America. On the other hand, carrier executives expressed hope that imminent product launches should generate robust demand for air freight in the coming months. A sharp surge in demand would quickly exhaust available capacity out of Asia, some carriers have warned. "The year so far has been extremely strong for Delta Cargo and we cannot carry much more cargo exit Asia because the planes are already running at an average load factor of 96 percent," Shah said. Cathay has put the three 747-400BCFs sidelined last year back into service, but demand levels so far have produced high utilisation levels, according to Hogg. "We have not a lot of capacity for charters," he said. Dearnley pointed out that while most of the 747-400 freighters that had been parked during the recession are back in action, the majority of the older 747-200Fs are unlikely to come back into the business. In addition, Japan Airlines' decision to exit the freighter market by October will take some capacity out of the market at a busy time, he said. Hogg shares Dearnley's take on the possibility of a return of the 747-200s. "I don't see them coming back," he said.
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