2021 will continue to be positive for air cargo due to the imbalance in supply and demand
by NUR HANANI AZMAN / pic credit: newsroom.airasia.com
AIR cargo companies are gearing up as industry players are projected to see a demand spike in transporting the Covid-19 vaccine once it is widely available.
AirAsia Group Bhd’s logistics arm, Teleport Commerce Malaysia Sdn Bhd, is already taking measures to serve new destinations that were not part of its network before.
However, the border closures between countries in Asia remain a constraint for the operator before they could expect to return to full capacity next year, said Teleport COO Adrian Loretz.
“There is a constant albeit a slowdown in medical supply such as personal protective equipment (PPE), face masks and Covid-19 test kits from China.
“Nevertheless, we foresee that there will be a spike in demand when the Covid-19 vaccines are ready,” he told The Malaysian Reserve (TMR) in an email reply.
There is a strong demand for time-sensitive goods such as pharmaceuticals, perishables and frozen products in Teleport’s cargo flights.
The group sees an increased in demand from shippers who re-establish their supply chains for a variety of goods that used to be shipped via airfreight before the Covid-19 outbreak.
Loretz said there was a minimal drop in the cargo demand, but a bigger drop in the belly space capacity to carry cargo because of the slowdown in passenger flights.
“As most international borders are still closed and only cargo flights are operational; we are trying to increase our capacity as quickly as we can, and utilise this opportunity to the fullest.
“In some of our core markets, like Indonesia and the Philippines, the domestic flights and cargo capacities have returned to preCovid levels and some are even exceeding it,” he explained.
AirAsia has obtained the Transport of Cargo in Passenger Compartments (TCPC) certification that allows Teleport to carry cargo on seats, overhead stowage compartments and under the seats depending on the size of the boxes.
Teleport has operated a total of 112 TCPC flights since May. Its first TCPC flight took off from Surabaya on May 2, 2020 to Hong Kong using the Indonesia AirAsia A320 passenger aircraft.
Loretz said the group is in the process of increasing its cargo capacity by removing seats on four AirAsia aircraft, with plans to convert additional aircraft, which will be operated as cargo-only flights throughout 2021.
“These aircraft will reconnect our core markets in South-East Asia and beyond, and ensure that we can serve our customers again with our cargo product.
“Teleport is also leasing additional freighter capacity from external providers to strengthen our service offer and expand our service network with affordable cargo fares,” he said.
Echoing the same sentiment, Pangolin Aviation Recovery Fund director Mohshin Aziz said 2021 will continue to be positive for air cargo due to the imbalance in supply and demand.
However, he said it won’t be as bad as it was in 2020 because many airlines have mobilised and enhanced their cargo operations accordingly.
“Despite many travel restrictions and lockdowns, the world economy still churning lots of electronic products, and high value food and components that must be transported by air cargo.
“Now with the story of the vaccine, there will be a spike in demand for pharmaceutical-related air cargo. 2021 is looking pretty good,” he told TMR.
Mohshin said the demand for air cargo is actually lower on a yearon-year basis by about 10%-20%.
He added that the issue is that there is not enough capacity to carry air cargo around the world.
“Under normal circumstances, commercial passenger aircraft carries about half of global air cargo in the underbelly of their aircraft.
“The other half is carried by dedicated freighters — aircraft that carries only cargo and no passengers,” he added.
Given that there are very few international flights nowadays, Mohshin said freighters are left to handle most of the air cargo movement in the world.
“Despite all the freighters in the world being mobilised, they are being used really hard as right now freighters are flying 11 hours per day compared to before the crisis with only between six and seven hours per day.
“But it is still not enough to move the required air cargo the world needs,” he explained.
Mohshin said some airlines have already reconfigured their passenger aircraft to carry more cargo, by removing seats, for example.
“I think few more airlines will employ this method as well if the current strong demand for cargo continues.
“Cargo has historically been a dud business for airlines. It was seen as complementary rather than primary contributor. But now, due to the effects of the pandemic, cargo is the only segment that is doing quite well,” he said.
Meanwhile, MAB Kargo Sdn Bhd (MASkargo) CEO Ibrahim Mohamed Salleh said its overall capacity was actually reduced due to the reduction in belly network and border restriction.
However, to compensate the capacity reduction, he said MASkargo operates its passenger-to-cargo (P2C) flights in addition to its freighter schedule with increased frequency to meet demand.
“There are two types of mobilisation for passenger aircraft: Cargo only in belly space; and cargo in cabin and belly space.
“The increase in capacity was made possible by the utilisation of both freighter and passenger aircraft,” he told TMR.
Besides MASkargo’s three freighter aircraft, the group also utilises Malaysia Airlines Bhd’ passenger aircraft: The A330-300s, A350-900s and A380-800.
He said the cost varies depending on the sector and aircraft type. On average, the operating cost is much higher, especially on the P2C as there is no passenger revenue.
“MASkargo is committed to positioning the pricing in tandem with the prevailing market rates, while at the same time ensuring our business continuity and supporting the industry and nation’s needs,” he said.
Malindo Airways Sdn Bhd (Malindo Air), however, did not see an increase in cargo capacity during this Covid-19 period.
“We were given approval to carry only medical supplies (PPE and face masks) in the cabin (on the seat) so far. We can use our Boeing commercial aircraft for cargo purposes.
“All our commercial aircraft are involved — five Boeing aircraft and six ATR fleets,” said Malindo Air spokesperson in an email reply to TMR.