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            september 21, 2019

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Air cargo peak season capacity to match demand


The air cargo market is better prepared to handle the expected strong demand during the peak season and avoid the chronic space constraints that sent freight rates sky high in late 2017 and in the run up to the Chinese New Year factory shutdowns.
This is the general view of air cargo industry associations, and it may go some way to alleviate concerns by shippers hurt by a lack of space last year, which saw cargo facing lengthy delays getting out of China and through Asia's freight hub airports, according to IHS Media.
Chairman of The International Air Cargo Association (TIACA) - who's also CEO of Jan De Rijk Logistics - Sebastiaan Scholte, said the industry expected "a good peak season this year," with solid demand for air freight despite the geopolitical trade risks.
"Last year the sudden surge in volume in the second half caught many off guard. This time the market is better prepared, and capacity has been secured through additional charters and block space agreements," he said. "Therefore, we expect capacity to be more in line with demand than last year."
Director general of the Association of Asia Pacific Airlines (AAPA), Andrew Herdman, agreed. "The air cargo industry has responded to the growth in demand for air freight by offering additional capacity, including belly space in growing numbers of passenger aircraft on major routes, as well as dedicated freighter operations, where daily utilisation has also increased."
However, shippers should still expect some robust peak season pricing from the airlines that are seeking to extend their profitability, which grew at a strong rate in the first quarter even as jet fuel prices surged by 55 per cent.
CEO of Kuehne + Nagel, Detlef Trefzger, said growing world trade and high consumer confidence and ongoing spending had made the forwarder "very confident" for the second half of 2018.
The only fly in the ointment could be the trade tariffs, although TIACA's Mr Scholte said that in the short term, the effects on air cargo would be minimal.
"It seems that for now further escalation between the US and Europe has been averted. However, between China and the US, and mainly from China to the US the effects might be felt more," he said.
The AAPA head took a similar view, but Mr Herdman warned an escalation of the dispute could change that.

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