With airlines around the globe grounding thousands of passengers jets due to the COVID-19 coronavirus pandemic, some are trying to keep a few jets flying by converting them to cargo carriers in order to keep at least a few crews occupied and some revenue coming in to the airline.
The cargo industry was in a slump as late as February, according to the International Air Transport Association (IATA), which said demand, measured in cargo tonne kilometres (CTKs), decreased by 1.4 percent compared to the same period in 2019. Adjusting the comparison for the impact of the Lunar New Year, which fell in February in 2019, and the leap year in 2020, which meant an additional day of activity, seasonally-adjusted demand was down 9.1 percent month-on-month in February. By February, the negative impacts of the COVID-19 crisis on air cargo demand were becoming visible.
In March, the Association of Asia Pacific Airlines (AAPA) said global demand for air cargo declined by 19 percent in March 2020 compared with the same month last year, but said demand is holding up “relatively well, despite economic disruption in many economies following measures aimed at slowing the spread of COVID-19”.
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Things might be looking up as airfreight rates between China and Europe increased rapidly last week but there was a drop to North America, according to figures compiled by Air Cargo News. The latest figures from TAC Index show that average prices from Shanghai to Europe last week increased by a huge 42.3 percent to US$7.33 per kg. This is a new record for the index, which was launched in March 2015. There was also a 27.4 percent week-on-week increase to US$5.11 per kg on services from Hong Kong to Europe – also a trade lane record for the index.
However, the situation on services from China to the US began to show signs of easing. TAC Index figures for Shanghai to North America fell by 3.5 percent week on week to US$6.36 per kg, although this is still the second highest amount recorded by the index, Air Cargo News reported.
All this is being attributed to the shipment of medical goods like personal protective equipment (PPE) and other items like ventilators that are in great demand in Europe and elsewhere as the global pandemic rages on.
In a webinar held Wednesday (15 April) by the Aviation Week Network, which is the communications means du jour in this day and age of social distancing and national lockdowns, three experts in the field explained the current state of play.
Karen Walker, editor-in-chief of Air Transport World, said global air cargo already having a “rough year” due to international trade wars between China and the US and this latest pandemic meant that air carriers, by grounding their planes, were taking all the belly-hold out of the equation but that passengers airlines are now taking some of their planes and converting them to cargo carriers to meet the “surge in demand for medical supplies and demand is outstripping capacity”. She also pointed out that converting passenger planes to cargo carriers is not an easy or straightforward process and that it was difficult in some cases for crews operating in quarantine zones. “The coming recession will be severe and it’s not clear that e-commerce will be enough to keep cargo on an even keel”.
In an online survey taken during the seminar, 43 percent of the participants said the cargo industry will revert to pre-crisis levels in terms of passenger aircraft and belly cargo, 37 percent said airlines will place a greater emphasis on cargo, and 19 percent said airlines will make a permanent shift to more cargo.
“I’ve been talking to passenger airlines that have, on the fly, become cargo airlines and have been forced to rethink the way they do things,” said Aaron Karp, a contributor to Air Transport World. “It will be months before the world gets back to normal and airlines are learning things…American Airlines had not operated an all-cargo flight since 1984, Delta is using its A350s for freighter services connecting China South Korea and the US,” he added.
Karp said the airlines that were moving cargo instead of passengers “pivoted on a dime” and realised they had assets like B777s and B787s that they could utilise to move medicine and food. Some airlines “shifted overnight” and “now they’re really cargo airlines with a small passenger business”, Karp said. “They have reinvented themselves on the fly to become cargo airlines and it’s been an energising process keeping the airlines going in this time of crisis”.
Chen Chuanren, China and Southeast Asia editor for Air Transport World, said countries like China, which he reminded everyone was the world’s factory, were practicing “face mask diplomacy” by shipping medical goods on state-owned air carriers. He also said airlines like Vietnam Airlines had 90-95 percent load factors on cargo and the world might see a rise in cargo from Vietnam as manufacturers look to spread out their supply chains. He also mentioned LCCs like AirAsia are realising some value from using their narrowbody planes for cargo flights and pointed out countries like Indonesia, shipping by goods is the fastest way and LCCs have dense networks in countries like Indonesia.
Pure freight operators are also having to adapt to deal with the pandemic, said Sanjeev Gadhia, CEO of Astral Aviation, which is based in Nairobi, Kenya. Gadhia said he was having to use multiple on some cargo flights in order to avoid having crews trapped under quarantine in some locations because “Africa is one continent and you have 54 countries and each country has its own policy relating to crew quarantines and the shut downs of economies”. He also said there were restrictions on ground handlers and customs officials coming to airports. His company is flying a dedicated fleet of eight aircraft intra-Africa and Europe to Africa and said there’s been a huge demand in Africa for PPE and large demand for cargo from China to Africa but little to nothing in demand terms for cargo from Africa to China.
Gadhia also said his cargo types have changed as one might imagine. Where before he used to ship loads of flowers to Europe, most cargo these days is vegetables and fish among other things because “no one wants flowers in (an economic) shutdown.
All the participants agreed that cargo demand is still rising and prices for air cargo services are going through the roof with one noting the US Federal Aviation Administration still had not approved US airlines being able to carry cargo in their main cabins yet. And all stressed the need for medical cargo to move quickly these days, in hours and not weeks as when they went via sea freight.
They all agreed as well that cargo companies are leading the way when it comes to digitising operations and removing paper from the cargo trade to speed up operations and even highlighted the fact that drones are being developed to help deliver cargo “the list mile” in places like Africa where there are problems with integrating the road infrastructure with airport cargo operations.
Karp said one positive aspect to the pandemic and the airlines’ response is that while earlier, airline employees were demoralised because passenger demand crashed, the move to shipping urgently needed medical cargo and food has “reinvigorated and re-energised them. Aviation has a unique ability in a crisis and planes like the A350s and B787s are great cargo aircraft if used that way. They are very fuel efficient and great assets to be able to move supplies around the world. We’ll see what happens after the crisis but for the time being the airlines have the assets that the world needs now”.
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