The situation in airfreight is most contradictory of all the sectors, with some parts of the market approaching something like complete shut-down whilst others are either recovering or booming.
Measuring this is exceptionally difficult. Even in normal times, airfreight data lags by several weeks and in this case data that is a few days old is useless as it cannot be extrapolated to create a trend.
The situation in Asia is perhaps the most complex.
China
The situation varies from region to region, however, generally China has been recovering fast since Monday (16-Mar). Destinations in Northern China are reporting reasonable conditions with Airports operating more-or-less normally, however, through-put volumes are restricted due to the lack of passenger flight belly-freight for international traffic. Domestic traffic has recovered much more quickly but from a lower base. Land transport serving airports remains problematic with a shortage of capacity and drivers as many migrant workers are only gradually returning to major cities.
Central China is still badly affected. All services out of the province of Hubei is still forbidden and essentially all traffic both, passenger and freight, remain quarantined. Regions approximate to Hubei are suffering from knock-on effects with some difficulties for trucking outside the major cities.
Southern China still appears to have problems, especially around Shenzhen, although this appears to be more about the timing of the recovery.
The situation in Hong Kong is distinct from the PRC and it has imposed stringent quarantine measures which are still in place. Although these are not aimed at cargo they continue to suppress belly-freight operations. It is believed that Cathay Pacific has commenced the adaption of previous passenger services for dedicated cargo operations.
South Asia
Although India has imposed restrictions on international movement by air travels restrictions are not as great in this region as yet. However, it is being badly hit by the restrictions elsewhere. Passenger flights down by almost 90% however domestic is not that badly affected. The freighter market seems to be working at normal levels of capacity however the problems at Dubai are said to be having a severe impact on operations.
Rest of Asia
South Korea, Japan, Singapore continue to impose intense quarantine barriers, however, the impact is quite different from that in China with land transport much less disrupted. Airports are running more or less normally, with the main problem area being the sharp reduction in passenger transport. The charter market seems to holding-up on a number of routes, notably South Korea and Japan.
Much of the pain has already been felt in North Asia however South East Asia is still seeing a deterioration, with routes other than those out of Singapore still declining although from higher levels. Freighter availability is mixed but high on a number of key routes.
Freighter rates are very high but possibly softening.
Europe
Europe is described as the new epi-centre of the COVID-19 outbreak and this is reflected in the status of the airfreight market. Effectively air transport has shrunk to a minimal level of belly-freight and some charters. Many countries in Europe have imposed various types of bans on the entry of non-citizens and this has brought the air transport network to a near-halt. Europe’s largest airline, Ryanair, has reduced its operations to just its core of travel within the British Isles. This is more-or-less the case with international travel, with trans-Atlantic operations now focussed on converting passenger operations to cargo-only routes, the success of which is unclear at present. Certainly marketing activity is intense.
As noted previously freighter activity is intense, with the large freight companies busy despite obstacles to their operations. Due to what is effectively a shift in demand away from belly-freight to freighters they are experiencing demand they cannot service and anecdotal evidence points for a scramble for aircraft. Landside transport and airport operations are functioning reasonably although congestion as a result of border restrictions are said to be an issue.
Freighter rates are very high. In the region of +50% higher than normal.
North America
The situation here is similar, yet less severe than Europe. Restrictions on passengers from Europe, China and the effective demand for its citizens to return has had obvious effects.
The trans-Atlantic trade lane is less badly affected than might be expected due to the heavy freighter traffic available. Rates have hardened but not as much as in other routes. The disproportionate presence of UPS and FedEx will affect the market.
US Domestic is less affected although flights are still down 30-50% and falling. State quarantine measure already having an impact and some airport operations have been affected.
Canada and Mexico routes are badly affected although freighter traffic here ramping-up.
Freight rate increases less extreme than elsewhere.
Middle East
This region has been badly hit by quarantine restrictions. Both international and inter-regional flight volumes are down by 90%. Almost all markets are just permitting freighter traffic although the supply of this appears to have increased on some routes, although the major routes out of UAE have suffered badly and are looking at reductions in freighter capacity.
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Source: Transport Intelligence, March 20, 2020
Author: Thomas Cullen
