Robust January demand keeps Cathay freighters busy

Robust January demand keeps Cathay freighters busy

Cathay Pacific's freighter schedule was fully operational in January.

HONG KONG — Solid freight demand from North American markets saw Cathay Pacific and sister airline Dragonair get the year off to a good start and allowed the carrier to operate an almost full freighter schedule in January.

The two airlines carried 147,275 tons of cargo and mail last month, a year-over-year increase of 12.5 percent, with the load factor rising almost 3 percent percent, the Hong Kong-based carrier announced. Capacity, measured in available freight ton kilometres, rose by 8.9 percent while cargo and mail revenue ton kilometres (RTKs) flown was up by 14.1 percent.

“Demand fell away, as expected, after the very busy end to 2014, but the markets remained relatively buoyant, particularly on the North American lanes,” said Cathay Pacific general manager cargo sales and marketing Mark Sutch.

Cathay is the world’s biggest cargo airline, with 25 freighters and huge belly cargo capacity. The volumes are handled by its wholly owned cargo terminal at the Hong Kong hub, Cathay Pacific Cargo Terminal, which recorded a throughput of 1.45 million tons in 2014, its first full year of operation.

“Traffic out of the key Hong Kong and mainland China markets was much stronger than in the same month last year. We saw a pick-up in demand as January progressed and by the end of the month we were operating close to a full freighter schedule. We expect to see something of a mini-rush before the Chinese New Year holidays begin.”

Chinese New Year is officially Feb. 19 and 20 but most factories have already shut down for what has become a three-week holiday in China. Shippers are always in a race against time to get their orders out of the country before the holidays begin.

Air freight has been riding a wave of demand since the middle of last year as U.S. consumers began to spend again and new smartphone launches kept bellies and freighters full. The growth in Asia-U.S. volumes coincided with the West Coast port congestion that steadily worsened, forcing jittery shippers to send urgent shipments by air to arrive in time for the holiday shopping season.

One month into the new year and that situation has not changed. Congestion is leading to weeks-long delays at the West Coast ports and reports are emerging of greater use of air by traditional ocean shippers.

For instance, Reuters reports that the port congestion has become so bad even Japanese carmakers are turning to air freight to get auto parts delivered to American assembly plants. Naturally, air freight prices are rising in tandem with the increasing demand, and space is in short supply. Lease prices for a 747 freighter are up around $600,000, double the usual peak season rate.

Fuji Heavy Industries Ltd's Subaru, the fastest-growing brand in the U.S., said it has been paying an extra $60 million a month in air freight. Fuji Heavy chief financial officer Mitsuru Takahashi told the news agency that without using air freight, U.S. production would have ground to a halt in mid-February.

It is a nightmare scenario for the auto industry that has huge volumes of parts in a production line depending on just-in-time delivery.

Contact Greg Knowler at gknowler@joc.com and follow him on Twitter: @greg_knowler.