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Ed's Note – September 2015

So far it’s been a peculiar year, good and bad. Firstly, the west coast port congestion put a smile on carriers' faces and some volumes in the air – demand was up, the charter business was booming. Anyone flying trans-Pacific was doing well – no matter the chronic weakness in Europe.

But then, of course, the congestion eased, shippers went back to ships, and the summer airline schedule, with its abundant belly capacity, set in. Carriers were warning of the chase for each and every kilo, and the inevitable yield decline. They weren’t wrong. In May, Drewry’s east-west air freight price index fell to the lowest level since its launch in 2012, to below $3 per kilo. In June it fell to less than $2.90. Carriers cautiously shifted some freighter services and trimmed capacity where possible. But despite the gloom, there were some notes of giddy optimism.


The Paris Air Show was one such note of hope, with freighter orders aplenty – 29 to be precise. Since then we’ve learnt that both China Southern and Atlas Air have taken a Boeing 747-400F out of retirement, EVA firmed up its order for five 777Fs, and FedEx burst in with a 50-strong 767F order. Okay, some are for fleet replacement. But there is certainly some confidence in cargo’s future – by those carriers that have decided to invest where others have exited.


In addition, some cargo carriers have also seen impressive numbers. AirBridgeCargo, for example, has seen tonnage rise 17% in the first half of 2015. Forwarders are reporting that Chinese airlines and all-cargo carriers, in particular, appear to be buying some market share – which is slightly more affordable with lower fuel prices.


They – and those who have ordered or dusted off freighters – are placing their bets on air freight’s growth. In the past there was a claim that if you didn’t have freighters you were not serious about cargo. And while belly carriers would have you believe that they are serious about cargo, the fact is, it is once again starting to look a bit like a two-tier system.


Of course, there are some great niche belly carriers, but when comparing airlines that have invested in cargo with those that have not, it is easy to see why some are experiencing a touch of bellyache.

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