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Chasing parcels

Operators are looking to grow as rising e-commerce fuels demand in the Asia-Pacific region, says Ian Putzger

I n June, MASkargo, the freight arm of Malaysia Airlines, expanded its main deck network with the launch of its express freighter service from its hub in Kuala Lumpur to Kota Kinabalu and Kuching. The operation uses A330-200F equipment and runs five days a week.

It is an indication that the carrier is back on the road to expansion. According to Chief Executive Officer Ahmad Luqman Mohd Azmi, MASkargo’s recovery is progressing well since its restructure in 2015, and the division is poised to break even this year, after several years of losses. He is bullish about growth opportunities, especially in the Asian arena.

All Nippon Airways (ANA), which launched passenger flights to Phnom Penh last September, is considering putting freighters into that market, a company spokesperson indicates. Hanoi is another potential destination for the Japanese carrier’s freighters, thanks to steady loads on its passenger flights serving the Vietnamese capital, he adds.

Cathay Pacific is another Asian carrier that is training its sights more on the regional market.


“The intra-Asian market is something we have been developing very determinedly in the last three years, for a couple of reasons. Firstly, it is a growing market driven by many strong emerging economies, and secondly, it is important that we always balance our business, and do not over-rely on a key market that is the focus of the cargo world,” says Mark Sutch, General Manager Cargo Marketing & Sales, in reference to the all-important transpacific sector.

“This year’s intra-Asian market has seen double-digit growth for the Cathay Pacific Cargo Group in terms of tonnage, and continues to look strong for the remainder of the year,” he says, adding that Cathay’s yields have improved.

ANA is decidedly upbeat on the market. “Seeing the Asian countries’ economic growth, globalisation of supply chains, expansion of FTAs etc., we expect the intra-Asian cargo market to stably increase by more than 15% in the coming five years,” the company spokesperson states.

Major air freight hubs in the region like Hong Kong and Seoul have reported double-digit cargo volume increases for the first four months of this year. The strength of intra-regional trade also manifests itself
on the water, where intra-Asian container volume was up 23.5% in 1Q17.

Perhaps unsurprisingly, China has been a huge driver of regional trade growth. It is the largest trading partner for a number of economies in the area, such as Korea. According to ANA, Japanese exports of electronic parts, semiconductors and automotive-related cargo to China (but also to elsewhere in the region) have been strong recently, and inbound flows have done well too.

“We see promising, potential markets increasing in China,” says the spokesperson.

Vietnam has been another strong performer, for both Cathay and ANA, and it continues to attract foreign investment in its logistics sector. DHL’s e-commerce arm launched a nationwide B2C service in July. Last year, Samsung SDS, the logistics arm of Korean giant Samsung, struck a joint venture deal with ALS Cargo Terminal, the leading handler at Hanoi’s Noi Bai airport. The agreement calls for the Korean firm to provide transportation, warehousing and customs brokerage.

Two other markets that have been going strong for Cathay are Japan and India. The latter has been the target of freighter launches for the Hong Kong-based airline in recent years, which now covers Mumbai, Delhi, Chennai, Bengaluru, Hyderabad and Kolkata. This year, it is looking to a “modest upward adjustment of capacity into India” in the high demand season, Sutch reveals.

“India continues to be very strong, with significant flows from China in particular,” he notes, adding that the strong demand justifies an increase in lift, despite the imbalance of flows.

For the most part, Cathay concentrates on its belly lift for intra-Asian cargo, which helps with yields. “We can play a tonnage game and make sure we get the balance with yield right,” says Sutch.

In terms of commodities, the migration of lower-end manufacturing from China to other countries in the region – notably Vietnam and Cambodia – has been a strong factor behind air cargo demand. This trend is continuing, operators confirm, but at this point all eyes are on e-commerce and its potential to transform the intra-Asian market. >>

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