Transatlantic air cargo high on demand

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Defying the general economic trend, transatlantic cargo continues to attract most attention. Namrata More ...

Though global economic growth appears to have slowed down in the past few months, transatlantic routes continue to showcase solid growth. Transatlanticroutes are a strong focus for air cargo, especially with a largeoperation of passenger flights connecting Europe to Americas and vice versa on a daily basis. The European market is Miami International Airport’s (MIA) third leading regional trade partner in terms of cargo volumes and values after South America and Central America, respectively. “Trade in 2014 between MIA and Europe amounted to over 58 million kilos valued at US$8.3 billion dollars, an increase of 18 percent and 12 percent respectively over the last five years,” said Chris Mangos, director of marketing at MIA. Mangos also added that during that time span, both volumes and values have risen and plummeted due to economic conditions on both sides of Atlantic. “The perspective at the moment is healthy despite lingering economic depressed areas in Europe and the more recent rise of the US dollar against the Euro.” From January through April 2015, the MIA – Europe trade picture has improved, confirmed Mangos. Transatlantic route is also very significant to Düsseldorf Airport, capital airport of the federal state North Rhine Westphalia in Germany. “United States is one of the top 10 trading partners of North RhineWestphalia and cargo volumes developed positively,” said Thomas Schürmann, head of marketing and sales at Düsseldorf Airport. Wide body aircraft have been a major contributor for growth on these routes for the airport. “The enormous belly capacities justified the growth of belly cargo compared to full freighters,” he added. Using larger aircraft types, belly cargohas risens trongly on transatlanticroutes, without expanding the routemap or the frequency. One indicator of the very high potential for exports from Düsseldorf to the US is the re-start of American Airlines flights in May 2015 connecting Chicago. For a European carrier like Lufthansa Cargo, the north Atlantic route is one of the major trade lanes. This is reflected in Lufthansa’s constant adjustment of routings to meet customer demands better and, to participate in new growth opportunities in the Americas. “We continually review market trends and are in close contact with our customers and key industries to better understand their needs in order to adjust our service offer,” said Achim Martinka, Lufthansa Cargo vice president- Americas. Lufthansa Cargo successfully upheld the number one position, in terms of market revenue, out of the Americas to the European market in the airline industry. “In the North American market the main commodities are automotive, pharmaceuticals, oil and gas, and also perishables especially out of Mexico.”There is also a high demand for transporting live animals such as horses out of Buenos Aires, Argentina and hatching eggs out of Sao Paulo, Brazil. 40.1 percent of the entire German air cargo trade to and from the United States derives from southern Germany – The Federal States of Bavaria and Baden-Würtemberg. “The cargo share handled between southern Germany and Canada amounts to 36.4 percent, and 38.5 percent with Mexico and Brasil,” said Markus Heinelt, director traffic development cargo at Munich Airport. Southern Germany is famous for its economic power and home to high-tech and automotive industries. Global players such as Siemens, BMW, AUDI, Porsche, Daimler, Bosch have their headquarters and production plants in Southern Germany as well as important production sites in the US, Mexico and Brasil. Additional investments from these and other Southern German corporations are in the pipeline. With Munich’s direct flight connections, and the proximity to those global players, Munich is well placed to support the cargo traffic. “The fact that the leading transport and logistic companies are constantly increasing their engagement in Munich proves it,” said Heinelt. The current cargo prospects on the transatlantic routes from and to Southern Germany exceed Munich Airport's present capacities. The airport's main goal is to increase belly freight and regular main deck segments. Port Authority of New York and New Jersey (PANYNJ), across its airports -John F. Kennedy International Airport, LaGuardia Airport, Newark Liberty, Stewart International, and Atlantic City International Airport-saw cargo tonnage to grow in April 2015, sustaining momentum by posting a 4 percent increase as domestic tonnage expanded 3.7 percent and international grew 4.1 percent.JFK is one of the world's leading international air cargo centers offering nearly four million square feet of modern, state-of-the-art cargo warehouse and office space serving key air cargo markets. The entire air cargo area is designated as a Foreign-Trade-Zone and serves the most important gateway for trans-atlantic cargo. Following relatively soft growth in March, a solid increase in April lifted the confidence in sustainability of cargo growth in the region to the next level. One of the main reasons is that domestic cargo levels are continuing to expand, having posted a fifth consecutive monthly increase. “International cargo has been on a solid upward trend since early 2014, but all the growth is centered in the transatlantic region. We anticipate that the transpacific region will start contributing in mid-summer and remain cautiously optimistic about the outlook,” said PANYNJ in a press statement. Key trends Belly cargo rates that are substantially lower than freighter operations hinder the expansion or further development opportunities for any airport in the transatlantic equation, explained Mangos. At MIA, belly cargo to/from Europe encompasses 19 passenger carriers serving 18 airports, where some are multiple daily frequency-served markets. On the freighter side, MIA nowhas three freighter airlines serving three destinations in Europe. “The difficulty in cultivating further freighter activity is augmented by significant costs per kilo savings for belly operators and therefore inhibiting enhanced freighter operations,” said Mangos. He further highlighted that this trend will continue to manifest itself even further for many US-Europe markets as new generation aircraft continue to offer enhanced capacity and dispatch reliability along with cost saving economics per seat and ancillary revenues from cargo. “It is a win-win situation for the passenger airlines.” For Chile’s LAN CARGO, economic development of South Americais the main market driver, which is crucial for the import traffic to the region. On the northbound routes, the demand for flowers especially in Russia is the mostimportant commodity going into Europe. “The trend of both drivers is very weak at the moment, therefore all carriers involved in these routes are suffering,” said Álvaro Carril, senior VP sales & marketing, LAN CARGO. Carril also feels that the main challenge at the moment is the constant growth of capacity coming from the bellies of the increasing passenger flights to Europe from all carriers. Transatlantic routes are of relevance to LAN CARGO because of the capacity provided by passenger flights to five destinations in Europe. The airline also caters with six Boeing 777 flights per week connecting the main cargo hubs in Europe, Frankfurt, Amsterdam and Basel to its core destinations in South America that are Campinas, Sao Paulo, Curitiba, Buenos Aires and Santiago. “The growth in the last years came from our passenger flights due to the significant belly capacity of the B777´s flying to London, Frankfurt and Paris,” added Carril. On the transatlantic routes, pharmaceuticals have been a vital segment to the air cargo business. 6.5 percent of all imports from USA to North Rhine Westphalia are pharmaceutical products. “We have observed this trend for quite some time and adopted such arrangements,” said Schürmann. In order to handle these highly sensitive products,according to the applicable regulations and requirements, Düsseldorf Airport Cargo developed a brand-new product – DUS Pharma. For this purpose, an ultra-modern pharma facility covering a total area of 800 sq m. was built. DUS Pharma Center consists of 23 temperature controlled storage rooms, which have individual temperature settings between 2° and 25°C for each compartment. Though Düsseldorf Airporthas seen constant freight volumes throughout the whole year, some destinations in the US are served with a reduced or seasonal frequency mainly during the winter schedule, on the passenger volumes. These irregularities in capacity makes it difficult to move cargo locally to or from the US via Düsseldorf. Going ahead, Lufthansa Cargo expects a significant increase in belly capacity due to more efficient aircraft types apart from the usual seasonal summer capacity increase. “The seasonal perishable cargo such as fruits and vegetables out of South America require a particularly flexible network,” said Martinka. “In addition, the Latin America’s weak home markets, especially Brazil, are having an impact on our business.”Strengthening of US Dollar has also resulted in declining cargo demand out of the Americas. “The imbalance between import and export tonnage will trigger a declining yield. This imbalance will remain a challenging topic for the rest of the year requiring creative solutions to maintain a profitable freighter network/offer.”

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