EXTRANS GLOBAL - Air Freight News - Week 23

Air Cargo Market and Airlines Update

1) The global air cargo market in May recorded the lowest freight rate level since March last year (Clive Data).

- Recently, the global air cargo market is under high tension from forwarders and airlines fearing cargo loss due to severe demand contraction and supply expansion.          

- In the situation where the cargo revenue of airlines has decreased by 31% and profitability has also decreased by 29%, the air cargo market freight rate in May recorded $2.41 per kilogram, the toughest month this year.

- From the demand side, while the May air cargo demand showed a 1% decline compared to the same period last year, recording the lowest monthly decrease this year, the downward pressure on freight rates is increasing as the supply growth rate rises more steeply.

- The market's supply volume recorded a 14% increase compared to the same period last year, and the load factor (L/F) also decreased by five percentage points from 55% in May last year to 50%.

- The freight rate levels for routes to the US and Europe showed a decline of 68% and 62% respectively in May, while the freight rate for cargo departing from northeast Asia to the US, except for the Chinese mainland market, fell by 60% compared to the same period last year.

- However, the freight rate from the Chinese mainland to the US showed a 31% decline compared to the same period last year, and the average rate of decline in the market's freight rate was below 40%.

   2)  Future air cargo outlook is positive with gradual growth (IATA Business Confidence Survey).

- The International Air Transport Association (IATA) recently evaluated the business confidence of airline executives, and both passenger traffic (Pax) and cargo volume (Cargo) are expected to have a positive outlook for the future.

- 86% of respondents expect passenger demand to increase over the next 12 months, and 52% expect cargo demand to continue to trend and anticipate an increase in cargo volume.

- The industry's outlook for passenger revenue is more positive than for cargo. This is because air travel appears to have fully recovered to pre-COVID-19 pandemic levels in 2020.

- Half of the respondents expect revenue in the passenger sector to increase over the next 12 months, especially for airlines in the Asia-Pacific region, which are showing a strong recovery trend.

- Another reason is that airlines have ordered nearly 1,200 aircrafts until May this year, and major aircraft manufacturers such as Boeing and Airbus are struggling to meet the surge in orders.

- The recent improvement in the global Purchasing Managers' Index (PMI) for new export orders, a leading indicator for cargo, is consistent with expectations that overall cargo volume will increase slowly.

   3)  Incheon Airport Authority holds a joint explanation session with Jeju Air to increase air cargo volume in Vietnam

Ø Incheon Airport Authority recently held a joint explanation session with Jeju Air in Hanoi and Ho Chi

Minh City in Vietnam called "Joint Explanation Session for Increasing Air Cargo Volume in Vietnam" (May 31 and June 1).

- IIAC sets 2023 ▶ the first year of airport operation normalization and another leap forward

- The airport authority has set 2023 as the first year for the normalization and resurgence of airport operations and is pursuing nine major projects centered on strengthening the airport's core functions, securing future competitiveness, and improving the competitiveness of the aviation industry.

- The event was part of the airport authority's "Air Cargo Incentive Program" to increase air cargo volume and introduced the competitiveness and strengths of Incheon Airport's logistics.

▶ Secure future competitiveness

▶ We are promoting 9 key tasks centering on the 3 pillars that lead the improvement of competitiveness in the aviation industry.

- A total of 61 logistics companies including EXTRANS GLOBAL and local forwarders in Vietnam attended, with about 150 officials. Jeju Air explained its strengths and plans in the air cargo field as the first low-cost carrier to operate cargo flights in Korea.

- The Incheon Airport Authority has set 2023 as the first year for the normalization and resurgence of airport operations and is pursuing nine major projects centered on strengthening the airport's core functions, securing future competitiveness, and improving the competitiveness of the aviation industry.

- The airport's cargo volume share in 2022 is ranked third in Southeast Asia after the Americas and Europe, with Vietnam accounting for the highest share in Southeast Asia.

- In 2020, Incheon Airport's international air cargo volume was 2.91 million tons, ranking second in the world for two consecutive years. The airport authority plans to enhance customized marketing by region and timely expand logistics infrastructure such as smart cargo terminals to firmly establish Incheon Airport's position as the world's second-largest air cargo airport.

- The joint explanation session with Jeju Air is expected to be a great help in creating new air cargo volume in Vietnam and Southeast Asia.

   4)  Korea and Japan to expand air routes to over 1,000 flights per week from September  

- The transportation authorities of Korea and Japan have agreed to recover international flight frequencies between the two countries to pre-COVID-19 levels. Existing routes will be increased, and local routes will resume service.

- The Korean Ministry of Land, Infrastructure and Transport held the first Korea-Japan Aviation Cooperation Meeting in 10 years with the Japanese Ministry of Land, Infrastructure, Transport and Tourism.

- As of the end of last month, the number of weekly international flights between Korea and Japan was about 890. The two countries plan to expand the number of flights to over 1,000 per week after the peak summer season from July to September.

- This is about 92% of the number of flights in 2019. The two countries also agreed to increase flights on existing routes, such as Incheon-Sapporo, Nagoya and Kansai, and resume service on routes such as Cheongju-Kansai, Asahikawa, and Daegu-Sapporo.

- The two countries also signed an aviation cooperation agreement, which includes strengthening partnerships in the aviation industry, establishing a strategic framework for aviation safety and new technology, and other contents related to the aviation industry.

   5)  Airline/GSA Event Update

(1)  MET EXPRESS AIR (MX) has launched ICN/MNL flights through a charter agreement with AIR INCHEON (KJ) as of June 16th.

- MX, a cargo airline based in the Philippines, was originally scheduled to begin operations in late April but conducted test flights before officially launching the route. 

- The agreement is for one weekly flight on Fridays, with flight number KJ5456 departing ICN at 0030 and arriving in MNL at 0350 on a B737-800F aircraft. 

- The GSA for this route is Daye Partners.

(2)  Korean Air (KE) has added two more passenger flights on the ICN-FRA route, making it a daily service starting from July 1st. 

-  The flight number is KE945, departing ICN at 1125 and arriving in FRA at 1740 on a B787 aircraft.

(3)  Asiana Airlines (OZ) will operate daily flights between ICN and Saipan from July 1st to August 31st

-  From September 1st to October 28th, the airline will revert to its previous schedule of four flights per week with flight number D3467.

(4)  Turkish Airlines (TK) has resumed its IST-KIX route after six years, starting from December 12th.

-  ISTKIX 4W(D1357) TK086 0205/ 2005 B787 Part of 12/12

-  ISTNRT 4W->7W증편 12/14일부   * 현재는 ISTHND구간 DAILY in flight

(5)  Japan Airlines (JAL) has started converting A321 passenger aircraft into P2F (passenger-to-freighter) cargo planes 

- Joint promotion with Spring Japan, a subsidiary of Japan Airlines, and Yamato Holdings

- Renovation completed in September, plans to operate domestic flights centering on Tokyo from April next year

(6)  Garuda Indonesia (GA) has increased the frequency of its Indonesia-Australia routes in July

-  DPSMEL 3W(D357) GA718 2305/0635+1 A333, Part of 7/2

-  DPSSYD 4W(D3456) GA714 2340/0725+1, A333 Part of 7/7

-  CGKMEL 4W(D3456) GA716 2115/0635+1, A333, Part of 7/4

-  CGKSYD 4W(D2457) GA712 2355/0945+1 A333, Part of 7/2

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