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Broker business

There may no longer be a peak season for charter operators to enjoy, but there is no shortage of one-off supply chain disruptions. 2015 has been particularly good for brokers and carriers, finds Martin Roebuck

Earthquakes and civil wars, sadly, create regular business for the air cargo charter sector. But one-off factors, from automotive recalls and the US West Coast ports dispute, to mass movements of refugees, have made 2015 a busier year than usual. While some industry sectors may be down, charter brokers and operators report high overall demand for their services, in marked contrast to the flat volumes and overcapacity scheduled carriers face on key trade lanes.


Pierre Van Der Stichele, director, business development at broker Chapman Freeborn, says business was expected to slow following the departure of UK troops from Afghanistan towards the end of last year. The military presence there had generated up to 10 food and equipment resupply charters per week. But despite gloom over the Chinese economy and escalating political problems in the Middle East and North Africa, he says the company is “bang on target” in 2015.


“We saw [the military drawdown] coming and put extra resources into the oil and gas [O&G] business to try to compensate,” says Van Der Stichele. The company’s efforts appear to be paying off.


“Less project equipment needs to fly at the moment, but pumps and other replacement parts are still needed. If there’s a breakdown it usually demands an urgent solution, whether it’s a 20-tonne shipment or a hand-carry part. O&G companies are looking to cut costs, and a greater choice is good for them.”


Richard Smith, freight director at Air Partner, confirms that O&G has remained important for charter brokers, despite the slowdown in exploration and development of new fields. “We’re providing ongoing support for projects that were already underway. In areas such as West Africa and the South Atlantic, moving materials at short notice can be challenging,” he says. “The need to respond rapidly may mean you have to get into specific airports, that are not always main hubs. If you can deploy ramp-loading Ilyushin IL-76s or Antinov AN-12s, you’re less reliant on local infrastructure.”


Development of new O&G fields has inevitably been impacted by the 40% fall in the price of oil, according to Shawn McWhorter, president for the Americas at Nippon Cargo Airlines. “Full charters will fall back temporarily, but we’re more into supplying replacement parts for the energy sector via part-charters, and this type of traffic continues to be healthy,” he says.


While O&G projects have reduced in scope, “there’s a tremendous amount of exploration continuing and it needs to be supported,” agrees Michael Steen, executive vice president and chief commercial officer for charter operator and aircraft lessor, Atlas Air. “Much of this involves long drilling pipes and needs full charters. And we’re already seeing requests relating to new investments in 2016.”


Road-rail standstill

Steen says that, in addition to regular work such as managing the movement of Formula One cars, and incremental business moving heavy machinery and energy plants, operators “have to be able to perform” when unexpected charter opportunities come along. These include natural disasters but also human catastrophes of a very different kind.


UK car manufacturers’ ‘just-in-time’ component supplies by road from Europe, and the reverse flows to mainland European assembly plants, came to a standstill over the summer months as striking ferry workers blockaded the port of Calais, further worsening delays caused as refugees from Syria and Africa tried to reach Britain by illegally boarding trucks and trains.


This generated a lot of air charters from small turboprops to widebody jets, says Van Der Stichele. “Normally automotive inventory is carried by truck or on Metroliners,” he explains. “For a two or three-week period we were called in to move large tonnages of essential parts on routes such as Katowice
to Birmingham. Poland is a big source of car parts.”


World Executive Airways (WEA), based at Lydd Airport close to the UK end of the Channel Tunnel, has seen a 40% surge in cargo charters this year as automotive customers moving urgent freight between the UK and Europe seek more reliable alternatives to rail and ferry services. The operator says airlines needing spares to repair grounded aircraft also made greater use of air transport during the summer.


Problems continue over and under the English Channel, but the migrant focus has now shifted to Eastern Europe as land borders are reinforced and road traffic controls tightened. Automotive suppliers in Serbia and neighbouring countries have been forced to use air charters in recent weeks to keep assembly lines moving in Germany and Scandinavia.


“Automotive business has been strong for several months now, especially in Eastern Europe” says Smith. “Suppliers in the Czech Republic, Slovakia and Turkey have been forced to leapfrog over borders with just a few pallets, or even just one at a time if they contain really urgent components. The manufacturer simply operates on low stockholdings.”


Peak? What peak?

In contrast, the peak season surge in charter activity is not what it used to be. McWhorter says the scheduled capacity NCA added from China to Chicago and Los Angeles in October will be sufficient to meet incremental demand.


NCA operates its eight Boeing 747-8 freighters around 14.5 hours per day, so they are mostly fully spoken for. Its five 747-400s have a lower daily utilisation and “two or three of them have available time on them”, he says. Aside from the iPhone 6S, however, he isn’t seeing the kind of major product launches that demand full charters.


“It won’t be one customer serving one shipper [with an entire aircraft load of electronics], but major forwarders taking an extra 10 or 20 tonnes,” he predicts. “We’re not going to see people throw capacity on to the market.”  >>

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