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EXTRANS GLOBAL - Air Freight News - Week 32 2024

Air Cargo General 

1)  Highly Anticipated Trends in Air Fares After August

   

  • The hottest route in July was the Europe route from the Middle East and Central Asia, and the average air cargo rate in July was $3.16/kg, up 126% from the previous year. This rate strength is due to the disruption in the maritime supply chain caused by the Red Sea incident.

  • The second and third hottest routes were the Southeast Asia-North America route and the Southeast Asia-Europe route.

  • The average rate for the Southeast Asia-North America route in July was $5.78/kg, and the Southeast Asia-Europe route was $3.85/kg.

  • The fourth-ranked route was the Northeast Asia-Americas route at $4.39/kg, and the fifth-ranked route was the Northeast Asia-Europe route at $4.17/kg.

  • According to Xeneta, as the shipping market has become relatively stable, the demand for air cargo has also decreased somewhat.

  • As demand for Asia-Europe and Asia-US shipping routes has declined in the shipping market, spot freight rates have also been on a downward trend. This decrease in container ship demand has also led to a slight decrease in air cargo demand in July.

  • However, towards the end of last July, air cargo demand surged on some routes, pushing the average air cargo rate up to $2.70/kg.

  • This cargo transportation demand is expected to continue in August and September as well. Particularly as we move into the second half of the year, air cargo demand is expected to increase, leading to an overall upward trend in freight rates.

 

2)  Hyundai Glovis participates as an investor in the acquisition of Asiana Cargo    

  

  • It is reported that Hyundai Glovis is reviewing participation in the bidding process to acquire Asiana Airlines' cargo business.

  • Specifically, Hyundai Glovis, which is a transportation affiliate of the Hyundai Motor Group, is exploring the possibility of participating as a strategic investor (SI) in the consortium led by Air Incheon that is pursuing the acquisition of Asiana Airlines' cargo business. It is also actively considering investing around 100 billion won in the fund being set up by the private equity fund (PEF) operator Staples Consortium.

  • Hyundai Glovis has reportedly been reviewing the option of participating as an SI in the bidding for Asiana Airlines' cargo business since the very beginning of the merger and acquisition (M&A) process.

  • Earlier, Hyundai Glovis CEO Lee Kyu-bok had announced at the '2024 CEO Investor Day' in June that the company plans to invest 9 trillion won in new investments by 2030. At the time, he stated that in addition to efficiently operating existing assets, the company will secure continuous growth momentum through around 1.3 trillion won in annual core asset investments, and that it will actively review growth through M&A methods as strategically needed."

 

3)  Concerns over absolute shortage of air cargo space despite expansion of supply in the second half of the year

             

  • Despite major airlines focusing their cargo capacity on Asia routes, the space shortage is expected to be severe in the second half of this year.
  • Air freight rates from Hong Kong (HKG) in July showed a slight decline compared to the previous month. However, the overall upward trend is expected to be maintained this year.
  • According to the Baltic Air Freight Index (BAIy), air freight rates from Hong Kong to Europe in July fell slightly to $4.50/kg from $4.56/kg. Rates from Hong Kong to North America also fell slightly from $5.75/kg in June to $5.72/kg in July.
  • This weakening of air freight rates is interpreted as a seasonal factor due to the vacation season. However, compared to the same period last year, rates remain strong, with Hong Kong-Europe up 243% and Hong Kong-North America up 22% year-on-year.
  • This year-on-year strength is due to the expansion of e-commerce demand and some cargo volumes being absorbed from the ocean freight sector.
  • However, the transatlantic route has not yet recovered, with Frankfurt (FRA)-North America rates falling 9.9% year-on-year to $192/kg in July.
  • In the midst of this, major forwarders are expressing concerns in advance about a shortage of air cargo from Asia during this peak season, drawing attention.

  • Dimerco, a Taiwanese freight forwarder, is asking shippers to pre-book their air cargo shipments for the 4th quarter, as there are concerns that air cargo space from China to Europe and the US will be constrained in the second half of the year.

  • Due to the concern that air cargo space constraints (E) to the US will expand

  • A Dimerco representative stated that the key for the air cargo market this year is to secure capacity in advance. He said that as we move into the second half of the year, the availability of wide-body aircraft for charter will be limited, due to the expansion of e-commerce volumes and disruptions in the ocean freight supply chain, which will have a significant impact on the air cargo market.

  • DSV has also noted that airlines are rapidly expanding capacity on transpacific routes to meet increasing demand. However, DSV forecasts that cargo capacity on transpacific routes will still be tight in the second half of this year, attributed to the situation in the Suez Canal and the surge in e-commerce volumes.

 

4)  "'Fly Gangwon', embraced by Winix, makes a new start as 'Paratat Air'"    

      

  • The low-cost carrier (LCC) 'FlyGangwon', which is based at Gangwon-do Yangyang International Airport, is changing its company name and making a fresh start.

  • Winix, the final prospective acquirer of 'FlyGangwon', plans to change the name of FlyGangwon to 'PARATA Air'. For this purpose, it has applied for patents on 4 brand names - PARATA Air, PARATA, Parata, and Parata Air.

  • The new company name 'PARATA' is a compound word combining the English and Italian words for 'healing' with the pure Korean word 'paradise', meaning a place where one can find happiness. The 'ta' (in Korean) represents 'riding' or 'getting on'.

  • Previously, Winix was confirmed as the new owner of FlyGangwon after the Seoul Rehabilitation Court approved the airline's reorganization plan on the 23rd. FlyGangwon was established in April 2016 to support Gangwon-do's tourism industry and regional economic revitalization, but its operations were soon disrupted by the outbreak of COVID-19, leading it to suspend operations and file for corporate rehabilitation last May.

  • Winix has now acquired FlyGangwon through a merger and acquisition (M&A) process, and plans to issue 4 million common shares (100%) worth 20 billion won through a paid-in capital increase. The 20 billion won acquisition cost will be used to repay rehabilitation claims and rehabilitation mortgage rights, with the remaining funds going towards unpaid wages and retirement benefits.

  • After the name change is complete, Winix plans to introduce new aircraft, expand its flight routes, and move the headquarters to the Mapo-dong area near Gimpo International Airport and Incheon International Airport to strengthen competitiveness. However, the airline will need to go through the process of re-obtaining its Air Operator Certificate (AOC), which typically takes about 6 months, before it can resume operations.

  • Winix plans to unveil the specific meaning of the new name 'PARATA' and its future plans in early August.

 

 

 

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