No holiday mood for air cargo carriers this Lunar New Year
Emirates looking to tap into demand from Chinese consumers
Warning signs for another gloomy year ahead for the global air cargo industry are already seen in the China traffic figures at the world’s largest international cargo airline, Emirates.
“Normally between New Year and Chinese New Year, you’d have seen a good couple of weeks of rebound ... we are not seeing that. That is probably the initial indicator that 2016 is going to be a challenging year,” said Nabil Sultan, who heads Emirates’ cargo operations Emirates SkyCargo as divisional senior vice-president.
The most recent air freight data from the International Air Transport Association show monthly global air cargo traffic contracted year on year for the first time in two and a half years in November by 1.2 per cent. “We have lost the consistency in growth ... and we are seeing yield decline of 8 to 10 per cent,” Sultan said in Hong Kong. SkyCargo’s growth in China and Hong Kong halved in 2015 from around 15 per cent in 2014 to 8 per cent owing to China’s export contraction in the second half of the year, he said.
While Emirates is the busiest international freight carrier according to IATA and the second-busiest after America’s Fedex by tonnage, its presence in the global air cargo powerhouse of China has been limited for geographical and traffic rights reasons – unable to serve the big trans-Pacific market between China and the United States. It is only just gaining access to the air freight centre of Zhengzhou – home to a Foxconn factory that makes two thirds of the Apple iPhones sold worldwide – with Emirates having announced a new passenger route from Dubai to the inland Chinese cities of Yinchuan and Zhengzhou from May.
Sultan said cargo was part of the consideration in the route planning, and that while he hoped the comeback of European consumer confidence would boost China’s exports westward, Emirates was also looking to tap into demand in the other direction as China transitions into a consumption-driven economy.
Boeing announced on January 22 it would cut the production rate of its B747-8 freighter by half from one plane a month to one plane every two months to match poor demand in the cargo market – a decision that is going to hit its balance sheet with a US$885 million dent.
“The air cargo market recovery that began in late 2013 has stalled in recent months,” Boeing Commercial Airplanes chief executive Ray Conner said when announcing the cut to production, which had already been adjusted downwards from a previous target of 1.3 planes a month. “We are taking the prudent step to further align production with current market requirements.”