Cargo capacity status in HKG and market rate info in China

March 11, 2020

Week 11 – Planned March schedule to Australia and New Zealand

SYD – 12 flights a week
MEL – 10 flights a week
BNE – 6 flights a week
PER – 5 flights a week
ADL – Nil
AKL – 4 flights a week (code share with NZ)

  • Last minute cancellation will be applied without previous notice in case pax load factor is not satisfactory.
  • Due to high demand for transit cargo to Australia and New Zealand, especially from China, Hong Kong contracted BSA agents are forced to reduce capacity to cater the transit cargo. Thus, the backlog of HKG local cargo keeps rolling and the snowball effect could intensify.
  • Even when HKG BSA agents wish to bid for more capacity at higher rate, CX commented that chances are not good. “Must go” capacity must pay AAX rate which is close to HKD50.0/K
  • Minimal chances of increasing freighter operations into Australia and New Zealand, due to extremely higher demand ex Hong Kong to Asia freighter capacity, which CX prefers and places at highest priority.

SYD – 14 flights per week
MEL – 5 flights per week
BNE – 4 flights per week

  • Same situation as CX, QF may cancel any flight operations anytime when pax load factor is not ideal.
  • The scheduled freighter to SYD on Sunday is still operating as normal.
  • No extra capacity to sell in Hong Kong market, thus no indication of VIP rate.

SIN – 14 flights per week

  • Due to very weak demand on passenger traffic, SQ reduced its flight frequency from 7 flights to 2 flights a day to SIN in March.
  • Freighter operations maintain 5 flights per week. However, last minute cancellations were encountered, and it’s suspected is due to charter demand.
  • Because of flight cancellations, SQ forfeit all contract BSA agents’ allocation in March and accept only ad hoc requests for both capacity and rate.

Airfreight capacity outlook – Australia and New Zealand

  • Since belly capacity will not resume to normal frequency before the end of March, and there is even higher possibility for further last-minute cancellations, backlog situation and snowball effect will be intensified from mid-March.
  • And because of high demand of transit cargo from China via Hong Kong to Australia and New Zealand, rate wise, it will further go up as anticipated.
  • At this moment, only QF announced an extra cargo flight on 27Mar to ease the situation. But no signs from CX and SQ so far.

Week 11 – Planned March schedule to Europe

LHR – 15 flights a week
LGW – Nil
MAN – 2 flights a week
AMS – 5 flights a week
BCN – 2 flight a week
BRU – 2 flights a week
CDG – 4 flights a week
FRA – 4 flights a week
MAD – 1 flight a week
TLV – 2 flights a week
ZRH – 4 flights a week

  • Last minute cancellation will be applied without previous notice, if passenger load factor is not ideal.
  • Freighter operations remain normal
  • Same situation as other in trade lanes. Due to tremendous reduction of flight frequency to Europe, the demand from local market as well as transit cargo from China to UK via Hong Kong are fighting a warfare situation.

LHR – Remain 7 flights a week

  • Same as CX last minute cancellation will be applied without previous notice, if passenger load factor is not ideal.

AMS – All flights cancelled from 09Mar until end Mar
CDG – All flights cancelled from 09Mar until end Mar

FRA – 5 flights a week

  • Same as other operators, last minute cancellations experienced once passenger load factor is too low.
  • Freighter schedule is maintained, and 3 additional flights added in March.

Freighter operators

  • Most freighter operators such as CV, EK, EY, LH, QR, RU, TK…etc, maintain, and even strengthen their weekly frequencies to support the capacity market. Unquestionably, all of them are selling extra capacity at VIP rates so to earn extra revenue.

Week 11 – Planned March schedule to USA

  • Again, same as other routings, last minute cancellations expected when pax load factor dropped.
  • Freighter schedule maintains

UA and other direct flights

  • All flights suspended in March

Freighter operators

  • Same as to Europe, all Transpacific freighter operators such as CX, CV, PO, RU…. etc maintain, and even reinforce their service to capture the daily rate bidding game.
  • And fortunately, Transpacific capacity market is dominated by freighter flights thus supply is still at high level.

Overall outlook

  • Due to further outbreak of Covid-19 in some Asian countries, flights to countries such as Japan and Korea will stop completely from week 11.This means, those with belly capacity will entirely disappear from the Hong Kong market, thus capacity situation will only worsen.
  • Freighter flights will “be the white knights to ease the pain” but due to high operating cost and high capacity demand, rates will stay extremely high and bidding will be needed from time to time.

CHINA MARKET RATES WEEK 11

  • To Europe, main gateway airports (AMS/FRA): US$ 4.50 per kg +
  • To USA, main gateway airports (LAX/ORD/JFK): US$ 5.50 per kg +
  • To Inter Asia airports (SIN/BKK/JKT): US$ 5.50 per kg +
  • To Australian main gateway airports (MEL/SYD/PER): US$ 5.50 per kg – US$ 7 per kg
  • These rates are only for week 11.
  • There will probably be further rise during the coming weekend, as rates have not reached the ceiling yet and market expects a very difficult week 12 with sky-high rates and limited capacity.