The cargo freight market is likely to remain weak this year, industry leaders believe, as it remains hampered by overcapacity and weak growth in several regions around the world.
There would be some capacity coming out of the market, so there would be some balance coming, but the price pressure would continue, with no significant improvement, said Cargolux finance chief Mr Maxim Straus , at the Airline Economics Growth Frontiers conference in Dublin. Weakness in South America and Hong Kong and other areas of the world were some causes mentioned.
Mr Ed McGarvey, treasurer of Atlas Air Worldwide noted that 2019 was a challenge due to Trump, trade and tariffs.
While the general freight market faces difficulties, the “Amazon effect” of growth in e-commerce presents an opportunity of which Atlas is looking to take advantage. Still, a sign of the market’s overall weakness is that Atlas is examining whether to temporarily park part of its fleet.
Mr Robert Convey, vice-president of sales and marketing at Aeronautical Engineers, which converts passenger aircraft to freighters, say the Boeing 737 Max’s grounding has been a huge negative for its business. The restriction of feedstock has been massive. Older aircraft that would have been candidates for freighter conversion are being kept in passenger service.
He also points out that the US Federal Aviation Administration has hardened its stance post the Max crisis and is taking much longer to approve companies to perform conversions. It’s fundamentally changed the way the FAA is looking at new freighter conversions. The process has become longer and more expensive. The hiatus on new feedstock could last two years, Mr Convey reckons.
Mr McGarvey says the concerns over recent years was the belly space in the Boeing 787 and Airbus A350 might take business away from dedicated freighters but argued that dedicated freighters were able to supply the flexibility that cargo customers require.
Brexit is unlikely to have a substantial short-term impact on the market, in the view of participants. It is believed there will be no impact during the transitional period that runs from January 31 to the end of 2021 – or even a pick-up in the charter trade. Thereafter, however, an EU-UK air services deal is required, which “could be an impact on the tonnage”. There is also the potential for Customs changes to affect operations over the long-term.
Source : Various Agencies