Cathay Pacific Airways plans to keep part of its freighter fleet in the hangar this year amid a protracted slump in the cargo market.
The airline's cargo tonnage fell 1.4 per cent year on year last month, following a 5 per cent drop in December. Cathay, the second-largest air-cargo operator behind Emirates SkyCargo, saw growth in shipments in only two of the past 12 months.
"Freight rates are under pressure because of overcapacity in the market," James Woodrow, Cathay's cargo director, said yesterday.
The freight business of Hong Kong's biggest airline has been hit by overcapacity in the market, compounded by weak demand in the United States and Europe since last year. Recovery in demand this year would hinge on the strength of the US economy, Woodrow said.
Cathay took five of its 26 freighters out of service last year. It also agreed to sell six Boeing 747-400 freighters to Boeing, with the aircraft leaving the fleet between now and 2016.
Aside from overcapacity in the industry, the scattering of the production lines on the mainland for Apple's iPhones and iPads has added to Cathay's woes.
"In the past, we could wait here for the products to be trucked down from the production lines in the Pearl River Delta … now we have to fly to new production centres in Chongqing and Zhengzhou," Woodrow said.
Chief executive John Slosar said about 50 per cent of the carrier's cargo tonnage was transshipments from the mainland.
The airline's share of the market in carrying technology products is under pressure as the competition in inland cities is much fiercer than that in its home base.
Hong Kong airport handled 2.4 per cent more cargo at 4.12 million tonnes last year while the volume carried by Cathay dropped 1.5 per cent.
To improve efficiency in handling transshipments, the carrier built its own cargo terminal in Hong Kong. The HK$5.9 billion facility, which marks its first anniversary this week, has been in full operation since October. With 1,800 workers, it has handled 600,000 tonnes of cargo over the past year.
"The Cathay Pacific Cargo Terminal is established to add simplicity and flexibility to meet customers' increasingly demanding needs," said Algernon Yau, the chief executive of Cathay Pacific Services.