Author: Admin

By Rebecca Jeffrey

Shanghai is back in business following a Covid lockdown but additional quarantine measures have resulted in trucking restrictions and staff shortages that are further battering airfreight supply chains.

Infections recorded following the formal end to lockdown in the city on June 1 has seen some areas return to Covid restrictions, temporarily restricting traffic and road access to trucks carrying airfreight in and out and around Shanghai. Covid testing requirements have also led to staff shortages. Beijing has also started mass testing again after an outbreak in the city.

Dimerco’s June 13-26 Air-Ocean Freight Market Forecast for shows that a “manpower shortage” in Beijing due to the pandemic has “caused at least 1 day delay”.

The logistics company added: “The amount of exported goods from other provinces to Beijing decreased significantly due to traffic restriction.”

Asia to Intra Asia space is “soft” at Shanghai Pudong (PVG) while the rate is falling. Meanwhile, there has been an “upturn” in Asia to US/CA space at PVG and the rate is stable.

Asia to Europe PVG space is “tight” and the rate is stable.

CNBC reported that highway closures due to quarantine have stopped trucks loaded with export goods from entering the Port of Shanghai, according to logistics company Orient Star Group. Cargo has been redirected to Ningbo, which is now becoming congested, or other small ports along the Yangtze River.

Air Cargo News reported on a backlog of shipping containers at the Port of Shanghai last month. Congestion had begun easing at the port, but additional pressure could see issues mounting again.

DHL Global Forwarding told CNBC there is still a shortage of truckers in and out of the Shanghai area, while Seko Logistics said testing rules remain a challenge with capacity yet to return to its pre-lockdown level.

Elsewhere in Asia, logistics is looking rocky in South Korea, where according to Dimerco, thousands of truckers are striking to protest against rising fuel costs. The strike is “disrupting production, hitting port activity, and posing new risks to a strained global supply chain”.

Port congestion with truck shortages is continuing in North America. Dimerco noted: “Expect the congestion to worsen once Shanghai returns from lockdown. Feeder capacity from Asia Base Ports to other Asian Out Ports remains limited.”

Both these issues have the potential to further exacerbate pressure on airfreight.

By Damian Brett

IATA has expressed optimism that the air cargo market will begin to improve in the months ahead, despite the current market challenges.

In its latest market update, IATA said that air cargo demand dropped by 11.2% year on year in April, while cargo load factors slipped by 5.2 percentage points on a year ago to 51.6%, and capacity was down by 2%.

The fall in demand is the largest since August 2020 and load factors are at their lowest level since February 2020, although still above pre-Covid levels.

The airline association said that the drop in demand was fuelled by the war in Ukraine leading to a fall in cargo capacity used to serve Europe as several airlines based in Russia and Ukraine were key cargo players.

Meanwhile, China’s zero-Covid policy and associated lockdowns led to capacity challenges due to flight cancellations because of labour shortages.

“Global goods trade has continued to decline in 2022, with China’s economy growing more slowly because of Covid-19 related lockdowns (among other factors),” IATA said.

“The lockdowns have brought much of the world’s largest port, Shanghai, to a standstill. Supply chain disruptions due to the Ukraine-Russia conflict are also adding to the downward pressure on trade.”

New export orders, a leading indicator of cargo demand and world trade are now shrinking in all markets except the US, the association added.

Despite the challenging conditions, IATA director general Willie Walsh sounded a note of optimism.

“The combination of the war in Ukraine and Covid-19 lockdowns in China have pushed up energy costs, intensified supply chain disruptions, and fed inflation,” Walsh said.

“The operating environment is challenging for all businesses, including air cargo. But with China easing lockdown restrictions, there is cause for some optimism and the supply/demand imbalance is keeping yields high.”

Looking at regional performance, Asia Pacific airlines saw their air cargo volumes decrease by 15.8% in April 2022 compared with the same month in 2021.

IATA pointed out that was the weakest performance of all regions and significantly slower than the previous month.

“Airlines in the region have been heavily impacted by lower trade and manufacturing activity due to Omicron-related lockdowns in China,” IATA said.

North American carriers posted a 6.6% decrease in cargo volumes in April compared with a year earlier.

“Demand in the Asia-North America market declined significantly, however, other key routes such as Europe – North America remain strong,” the association said.

European carriers registered a 14.4% drop in demand April as the Ukraine war and lower manufacturing activity in Asia affected volumes.

Middle Eastern carriers experienced a 11.9% year-on-year decrease in cargo volumes in April.

“Significant benefits from traffic being redirected to avoid flying over Russia failed to materialise,” IATA said “This is likely due to persisting supply chain issues in Asia.”

Latin American carriers noted the strongest performance with demand up 40.9% year on year. In response, airlines in this region have shown optimism by introducing new services and capacity, and in some cases investing in additional aircraft for air cargo in the coming months.

African airlines saw cargo volumes decrease by 6.3% in April 2022 compared to April 2021 – significantly slower than the increase registered in the pre month.

09 June 2022     

Geneva – The International Air Transport Association (IATA) announced that air travel resumed its strong recovery trend in April, despite the war in Ukraine and travel restrictions in China. This was driven primarily by international demand.

Note: We have returned to year-on-year traffic comparisons, instead of comparisons with the 2019 period, unless otherwise noted. Owing to the low traffic base in 2021, some markets will show very high year-on-year growth rates, even if the size of these markets is still significantly smaller than they were in 2019.

•             Total demand for air travel in April 2022 (measured in revenue passenger kilometers or RPKs) was up 78.7% compared to April 2021 and slightly ahead of March 2022’s 76.0% year-over-year increase.

 •            April domestic air travel was down 1.0% compared to the year-ago period, a reversal from the 10.6% demand rise in March. This was driven entirely by continuing strict travel restrictions in China, where domestic traffic was down 80.8% year-to-year. Overall, April domestic traffic was down 25.8% versus April 2019.

•             International RPKs rose 331.9% versus April 2021, an acceleration over the 289.9% rise in March 2022 compared to a year ago. Several route areas are actually above pre-pandemic levels, including Europe – Central America, Middle East – North America and North America – Central America. April 2022 international RPKs were down 43.4% compared to the same month in 2019.

“With the lifting of many border restrictions, we are seeing the long-expected surge in bookings as people seek to make up for two years of lost travel opportunities. April data is cause for optimism in almost all markets, except China, which continues to severely restrict travel. The experience of the rest of the world is demonstrating that increased travel is manageable with high levels of population immunity and the normal systems for disease surveillance. We hope that China can recognize this success soon and take its own steps towards normality,” said Willie Walsh, IATA’s Director General.

April 2022 (% year-on-year)         World share1     RPK        ASK        PLF (%-pt)2         PLF (level)3

Total Market      100.0%  78.7%    45.5%    14.5%    77.8%

Africa    1.9%      108.4%  66.4%    13.7%    68.0%

Asia Pacific          27.5%    -25.4%  -25.3%  -0.1%     67.0%

Europe 25.0%    301.6%  172.5%  25.6%    79.5%

Latin America     6.5%      139.2%  114.4%  8.4%      80.9%

Middle East        6.5%      238.1%  91.3%    30.9%    71.3%

North America  32.6%    78.5%    43.8%    16.7%    85.8%

1% of industry RPKs in 2021   2year-on-year change in load factor   3Load Factor Level

 International Passenger Markets

•             European carriers’ April international traffic rose 480.0% versus April 2021, substantially up over the 434.3% increase in March 2022 versus the same month in 2021. Capacity rose 233.5% and load factor climbed 33.7 percentage points to 79.4%.

•             Asia-Pacific airlines saw their April international traffic climb 290.8% compared to April 2021, significantly improved on the 197.2% gain registered in March 2022 versus March 2021. Capacity rose 88.6% and the load factor was up 34.6 percentage points to 66.8%, still the lowest among regions.

•             Middle Eastern airlines had a 265.0% demand rise in April compared to April 2021, bettering the 252.7% increase in March 2022, versus the same month in 2021. April capacity rose 101.0% versus the year-ago period, and load factor climbed 32.2 percentage points to 71.7%.

 •            North American carriers’ April traffic rose 230.2% versus the 2021 period, slightly above the 227.9% rise in March 2022 compared to March 2021. Capacity rose 98.5%, and load factor climbed 31.6 percentage points to 79.3%.

•             Latin American airlines experienced a 263.2% rise in April traffic, compared to the same month in 2021, exceeding the 241.2% rise in March 2022 over March 2021. April capacity rose 189.1% and load factor increased 16.8 percentage points to 82.3%, which easily was the highest load factor among the regions for the 19th consecutive month.

•             African airlines’ traffic rose 116.2% in April 2022 versus a year ago, an acceleration over the 93.3% year-over-year increase recorded in March 2022. April 2022 capacity was up 65.7% and load factor climbed 15.7 percentage points to 67.3%.

Domestic Passenger Markets

April 2022 (% year-on-year)         World share1  

RPK        ASK        PLF (%-pt)2         PLF (level)3

Domestic             62.3%    -1.0%     -8.6%     6.2%      80.1%

Australia              0.8%      47.5%    45.5%    1.0%      73.3%

Brazil     1.9%      133.3%  131.7%  0.6%      78.1%

China P.R.            17.8%    -80.8%  -73.6%  -20.9%  55.8%

India      2.2%      78.6%    33.8%    20.0%    79.8%

Japan    1.1%      57.0%    31.1%    9.1%      55.4%

US          25.6%    48.2%    26.0%    13.2%    88.4%

1% of industry RPKs in 2021   2year-on-year change in load factor 3Load Factor Level

•             Australia’s domestic demand rose 47.5% compared to April 2021, an improvement over the 36.5% rise in March traffic, owing to the lifting of travel restrictions and rising consumer confidence.

 •            Japan likewise saw monthly gains, with domestic RPKs up 57.0% year-over-year, up from a 46.5% rise in March 2022 compared to March 2021. 

2022 vs 2019

Total April passenger demand was down 37.2% compared to the same month in 2019, which is an improvement compared to the 41.3% decline for March 2022 versus March 2019.   

April 2022 (% ch vs the same month in 2019)        World share in1                RPK        ASK        PLF (%-pt)2         PLF (level)3

Total Market      100.0%  -37.2%  -32.9%  -5.3%     77.8%

International      37.7%    -43.4%  -38.6%  -6.5%     76.2%

Domestic             62.3%    -25.8%  -22.4%  -3.7%     80.1%

The Bottom Line

“With the northern summer travel season now upon us, two things are clear: two-years of border restrictions have not weakened the desire for the freedom to travel. Where it is permitted, demand rapidly is returning to pre-COVID levels. However, it is also evident that the failings in how governments managed the pandemic have continued into the recovery. With governments making U-turns and policy changes there was uncertainty until the last minute, leaving little time to restart an industry that was largely dormant for two years. It is no wonder that we are seeing operational delays in some locations. In those few locations where these problems are recurring, solutions need to be found so passengers can travel with confidence.

“In less than two weeks, leaders of the global aviation community will gather in Doha at the 78th IATA Annual General Meeting (AGM) and World Air Transport Summit. This year’s AGM will take place as a wholly in-person event for the first time since 2019. It should send a strong signal that it is time for governments to lift any remaining restrictions and requirements and prepare for an enthusiastic response by consumers who are voting with their feet for a full restoration of their right to travel,” said Walsh.

By Rebecca Jeffrey

CMA CGM Air Cargo received its air carrier certificate from the French Civil Aviation Authority on June 1, following the delivery of its first Boeing 777F.

Confirming this latest development for the airline launched in March 2021 in its first quarter 2022 financial results, the CMA CGM Group said it is supporting the growth of CMA CGM Air Cargo with a fleet of 12 aircraft by 2026.

These aircraft include four Airbus 330-200Fs, currently in operation; two new Boeing 777Fs, one of which was delivered on May 31, while the second is in the process of being delivered; an additional two new B777Fs that have been ordered and are scheduled to enter the fleet in 2024; and four new A350Fs which will join the fleet between 2025 and 2026.

Last month it was announced that CMA CGM is planning to purchase a 9% stake in Air France-KLM Group as part of a new 10-year partnership that will see the airline and shipping group combine their fleets.

Air France-KLM has a fleet of six full freighters – based at Paris CDG and Schiphol – and has outstanding orders for a further four aircraft.

The partnership also covers Air France-KLM’s belly aircraft capacity, including over 160 long-haul aircraft.

In the first quarter of 2022, the CMA CGM Group’s revenue reached $18.2bn, while EBITDA was $8.9bn.

Airfreight volumes fall again in May

By Rebecca Jeffrey

General air cargo market volumes fell again in May as the pandemic, Ukraine-Russia war and economic turbulence continued to take their toll.

According to Xeneta’s CLIVE Data Services, general air cargo market volumes fell 7% year-over-year in May, following on from declines in April and also in March.

Airfreight demand for May was also down on pre-Covid 2019 figures for the month, declining by 8%.

Capacity, meanwhile, was up by 4% year on year in May and dynamic load factors – taking into account both weight and space – were down by nine percentage points on last year to 60%.

Air cargo market performance in May was affected by the continuing war in Ukraine, the ‘cost of living crisis’ causing consumers to reduce spending, stock market declines, higher interest rates, Covid-related restrictions in China, and more warnings of global recession.

However, continued oceanfreight and port congestion and disruption will benefit air cargo.

Niall van de Wouw, founder of CLIVE and now chief airfreight officer at Xeneta, said North Atlantic air cargo data in May 2022 may provide a test case for the direction of other markets once they also return to their pre-Covid levels.

He said the Europe to North America market has “changed profoundly in the last 8 weeks from load factors of 82% in March to 64% in May”.

“May’s dynamic load factor was also 22 percentage points lower than in May 2021, while, in March, load factor on this lane was seven percentage points lower,” van de Wouw explained.

“So, this is not just seasonality, it is the capacity coming back into this market. In March it was 44% higher than in 2021 and in May around 82% [up]. This is a big swing, and it emphasises the jump in the cubic capacity on these routes.”

As North Atlantic passenger flights ramp up, rates in May 2022 were up 16% versus 2021 and up 134% versus 2019. In April 2022, corresponding figures stood at plus 26% versus 2021 and  up 145% versus 2019.

One “light on the horizon” for air cargo volumes might stem from the outcome of the current labour negotiations at US west coast ports and any potential future disruption to the ocean market across the Pacific, which van de Wouw describes as “another example of an external event that has nothing to do with airfreight that could still have a profound impact on the market.”

Airfreight rates have continued to drop since the return of more passenger flights and the introduction of airline’s summer schedules. In the last week of May 2022, rates from Europe to North America showed negative year-over-year growth for the first time in two years.

“The Atlantic market is interesting to follow to see how rates shift in the coming months, as it might be a bellwether on how other markets will develop when the capacity of passenger flights returns to it former level and beyond. We sense an anticipation of a slower summer market, followed by hope for growth in Q3 as is traditionally the case, but the market does not look great right now. There are more clouds on the horizon than there were two months ago,” van de Wouw said.

By Damian Brett

Cathay Pacific is continuing to restore its freighter network with the addition of flights to Amsterdam Schiphol, Paris CDG, London Heathrow, Dubai, Riyadh and Phnom Penh.

Starting June 17, the carrier will fly from its home hub Hong Kong to Heathrow once a week with a B747 freighter. Flights to Paris will start on June 1 utilising B747F aircraft flying two/three times per week.

And flights to Schiphol will launch on June 3 operating three/four times per week.

The carrier is also increasing its flights to Frankfurt from the current three per week to four starting the week commencing June 13.

Elsewhere, Cathay Pacific said it would restart freighter flights to the UAE (DWC seven times per week), Saudi Arabia (Riyadh once per week) and Cambodia (Phnom Penh once per week).

The carrier is also planning to expand its freighter operations to the US in June, although exact details are hard to confirm.

The move comes following Hong Kong’s decision to ease Covid crew restrictions on May 1.

The new rules mean that vaccinated cargo crew will no longer be required to quarantine on returning flights but will be subject to a 14 day medical surveillance period, regular testing and will need to stay in a closed-loop system for any overnight stays.

At the start of the year, the carrier grounded its entire long-haul cargo network due to strict quarantine restrictions, but it has been gradually adding capacity back in, mainly concentrating on intra-Asia flights and the Transpacific.

Frankfurt was first added back into the carrier’s freighter network in April – the first time the carrier had flown freighters to Europe since December.

By Damian Brett

 (L) Benjamin Smith, AF KLM and Rodolphe Saade, CMA CGM. Source: AF KLM

CMA CGM is planning to purchase a 9% stake in Air France-KLM Group as part of a new partnership that also includes combining their freighter operations.

The two firms today announced that they had signed a 10-year exclusive strategic partnership that will see the airline and shipping group combine their current fleets of 10 full-freighter aircraft as well as the 12 freighters they have on order.

The partnership also covers Air France-KLM’s belly aircraft capacity, including over 160 long-haul aircraft.

CMA CGM currently operates four full freighter aircraft and has placed orders for an additional eight aircraft, two of which may by operated by Air France-KLM.

Meanwhile, Air France-KLM has a fleet of six full freighters – based at Paris CDG and Schiphol – and has outstanding orders for a further four aircraft.

CMA CGM also intends to take up to 9% of Air France-KLM’s ex-post share capital, for a period consistent with the implementation of the partnership.

This exclusive partnership will see both parties combine their complementary cargo networks, full freighter capacity and dedicated services in order to build an even more competitive offer thanks to the unrivalled know-how and global footprint of Air France-KLM and CMA CGM.

 “The strategic commercial partnership is expected to generate significant revenue synergies including the joint design of the full freighter networks and enhanced products and services mix opportunities,” the partners said.

 “It will help meet customers’ ever-increasing need for more integrated and resilient supply chains and will leverage Air France-KLM’s vast existing franchise, experience and capabilities in air freight, backed by a global cargo network.”

Rodolphe Saadé, chairman and chief executive of the CMA CGM Group, said: “I am very pleased with this strategic partnership with Air France-KLM. It allows us to significantly accelerate the development of our air division, CMA CGM Air Cargo, which was created just over a year ago, and to position our two companies among the world’s leading players in air freight.

 “This partnership is fully in line with CMA CGM’s strategy and its ambition to become a leader in integrated logistics, for the benefit of its customers. Through our stake in the company, Air France-KLM will be able to count on us to support its future development.”

Air France-KLM Group chief executive Benjamin Smith added: “This strategic partnership leverages the complementary skills, expertise and activities of Air France-KLM and CMA CGM. It is a landmark step which will significantly strengthen and expand the Group’s position in the air cargo industry.

 “I am also extremely pleased that this commercial partnership with CMA CGM has resulted in their decision to invest directly  in the Air France-KLM Group, demonstrating a strong testimony of their belief in the future success of our Group.”

The move comes as CMA CGM, which has traditionally been one of the world’s largest container shipping lines, has been expanding its logistics offering across the modes.

During the last three years, CMA CGM has announced the acquisitions of CEVA Logistics, Ingram Micro’s Commerce & Lifecycle Services (CLS), Colis Privé and GEFCO.

Also, in March 2021, the company created CMA CGM Air Cargo, which operates a fleet of four A330-200 freighters and has ordered four B777FS and four A350Fs.

CMA CGM is not the only shipping line to be investing in the air cargo industry as they look to offer complete supply chain solutions.

In April, shipping giant AP Moller Maersk announced the launch of Maersk Air Cargo.

The new airfreight company is the result of the existing in-house aircraft operator, Star Air, transferring its activities into Maersk Air Cargo.

Last year, the company announced that it had purchased two new B777 freighters to be delivered by Boeing in 2024, and leased three B767-300 freighters which will be operational next year through Cargo Aircraft Management, the leasing arm of ATSG.

The B767 freighters will be utilised on US-China operations, the company said.

Maersk’s ambition is to have approximately one third of its annual air tonnage carried within its own controlled freight network.

As well as investing in air cargo, the shipping company has also been adding to its forwarder network, recently acquiring Senator International which has a large presence in the air cargo market.

It followed this deal up with the purchase of Pilot Freight Services, another forwarder with a strong presence in air cargo.

May 17, 2022

For the first time in 2 years, the Federation of Asia Pacific Aircargo Associations, or FAPAA, is proud to announce that it will be holding a face-to-face general meeting in Penang on 15–16 July 2022 at the Golden Sands Hotel on Batu Ferranghi. The Penang Freight Forwarders Association (PFFA) will be the host of this year’s meeting, which expects to gather major associations across Asia Pacific to discuss important industry issues. In an interview, Paul Golland, chairman of FAPAA and vice chair of the International Freight Forwarders and Customs Brokers Association of Australia (IFCBAA), gave us a rundown of the comeback meeting, as well as his take on the air freight industry in Asia Pacific.

Can you give us your outlook for freight and logistics across Asia Pacific?

There does seem to be a slow but steady increase in airfreight across the Asia Pacific region but this has fallen behind where most thought it would be due to Omicron and the conflict in the Ukraine. The latest IATA figures show a 2.7 percent growth in January 2022 YoY. Trade and economical growth continues to expand but consumer confidence is easing. More flights are being canceled which reduces the airfreight capacity when it should be growing more.

Which countries do you think will see more logistics infrastructure developments across the region?

Those countries that are relaxing their border controls will benefit more than those keeping restrictions in place. Australia, after having some of the toughest border controls, is reopening to the world and seeing more tourists, flight capacity which help to increase its economy. The Asia Pacific region must follow Europe in living with Covid but reducing the disruption to people, travel , and economies.

What are the challenges for freight forwarders and logistics right now? Where are the opportunities?

The biggest challenge at the moment is getting space on flights to move their customers’ cargo. Freight is moving from other parts of the world into the Asian hubs but then being held due to lack of available space to complete the last leg of its journey. This lack of space has also seen an increase in freight rates throughout the world. Lack of staff at airlines, terminals, warehouses etc are also causing challenges for freight forwarders often meaning cargo misses its connections or is delayed in check in and availability at destination.

Finally we are seeing the introduction of shipping lines moving into the airfreight business and threatening what have up to now been freight forwarder markets. Opportunities will exist for those who can react quickly and efficiently once the effects of the pandemic reduce further. Freight forwarders have to ensure they have trained staff in place to meet customer needs in the future.

How important are trade bodies like FAAPA and IFCBAA in addressing industry issues?

Trade bodies are vitally important to industry as they allow individual members to have a voice that reaches national and international bodies as well as governments. FAPAA does this one step higher in that it is made of country associations rather than individual members. It speaks as a single voice for the airfreight industry in the Asia Pacific, the biggest region movers of airfreight in the world. It looks to deal with Macro issues covering the whole region.

My association IFCBAA represents the interests of Australians forwarders and brokers domestically and feeds international issues on to organisations, such as FAPAA, who then refer them to the likes of IATA. In this way, we get the best representation for all our members on international issues.

How many associations have confirmed their attendance for this year’s AGM? What can participants expect at the event?

So far we have Malaysia, Australia, Sri Lanka, India, Indonesia, Vietnam, Singapore, Pakistan and Taiwan attending and we are waiting to hear from another 5-6 countries depending on their government’s approach to Covid. We intend to offer online access to those unable to attend personally. Participants can expect to discuss all aspects of the international airfreight business, training, what other member countries are doing and their issues and hopefully hear from the likes of IATA and carrier staff. In essence we want delegates to come away able to go back to their members and advise them on the trends for future airfreight development.

Why should companies attend the upcoming event? What are the benefits of being part of a wider trade body?

As FAPAA is an association of country associations, and individual companies do not really attend. They rely on their elected representatives to put their issues forward at an international forum with access to senior organisations they would not normally get to talk with, as individuals. This is the biggest advantage of being part of a bigger trade body as it allows every member of a national organisation to have a voice at the international table.

Other Topics: Air & Cargo Services, Air Cargo, Air Cargo Asia, Air Cargo Freight, Air Forwarding, Air Freight, Air Freight Asia, Air Freight Logistics, Air Freighter, Air Freighting, Air Logistics Asia, Air Shipping Asia, Airlines Cargo, Airways Cargo, Asia Cargo News, Cargo Aviation, FAPAA, IFCBAA, Industry Associations, Industry Events, Penang Freight Forwarders Association, PFFA

By Damian Brett

Shanghai is aiming to end the Covid lockdown that has heavily affected manufacturing output on June 1.

The city’s deputy mayor outlined a phased approach to lifting its lockdown and restrictions on movement started to ease after March 21.

The move comes as community infections reached zero for the third day, according to the South China Morning Post.

The logistics industry has been heavily affected by the lockdown’s impact on the production of goods.

Some factories have re-started operations in recent weeks but with reduced output due to the requirement that they operate under a closed-loop system.

In a recent results call, Kuehne+Nagel chief executive Detlef Trefzger said that the lockdown had reduced China’s production output by around 15%.

In response, statistics from Accenture’s Seabury Consulting show that in the first two weeks of April airlines reduced cargo capacity from Shanghai Pudong (PVG) show that in the first two weeks of April, cargo capacity  is 66.4% down on the same period in 2021.

Production is expected to ramp up quickly once restrictions are lifted, which should result in increased air cargo demand as companies look to quickly move goods to end market.

Trefzger expected that when the lockdown is eased production would quickly ramp up – within weeks – and how quickly supply chains from the city returned to normal levels depended on how fast carriers could re-add capacity back into the market.

Bruce Chan, senior analyst at investment bank Stifel, has also predicted a surge in demand when factories in Shanghai fully re-open.

17 May 2022      

Singapore – The International Air Transport Association (IATA) has urged Asia-Pacific states to further ease border measures to accelerate the region’s recovery from COVID-19.

“Asia-Pacific is playing catch-up on restarting travel after COVID-19, but there is growing momentum with governments lifting many travel restrictions. The demand for people to travel is clear. As soon as measures are relaxed there is an immediate positive reaction from travelers. So it is critical that all stakeholders, including governments are well-prepared for the restart. We cannot delay. Jobs are at stake and people want to travel,” said Willie Walsh, IATA’s Director General, in his keynote address at the Changi Aviation Summit.

The Asia-Pacific region’s international passenger demand for March reached 17% of pre-COVID levels, after having hovered at below 10% for most of the last two years. “This is far below the global trend where markets have recovered to 60% of pre-crisis levels. The lag is because of government restrictions. The sooner they are lifted, the sooner we will see a recovery in the region’s travel and tourism sector, and all the economic benefits that will bring,” said Walsh.

Walsh urged Asia-Pacific governments to continue easing measures and bring normalcy to air travel by:

•    Removing all restrictions for vaccinated travelers.

•    Removing quarantine and COVID-19 testing for unvaccinated travelers where there are high levels of population immunity, which is the case in most parts of Asia.

•    Lift the mask mandate for air travel when it is no longer required in other indoor environments and public transport.

“Supporting and more importantly accelerating the recovery will need a whole of industry and government approach. Airlines are bringing back the flights. Airports need to be able to handle the demand. And governments need to be able to process security clearances and other documentation for key personnel efficiently,” said Walsh.

China and Japan

Walsh noted that there are two big gaps in the Asia-Pacific recovery story: China and Japan.

“So long as the Chinese government continues to maintain their zero-COVID approach, it is hard to see the country’s borders reopening. This will hold back the region’s full recovery.

While Japan has taken steps to allow travel, there is no clear plan for the reopening of Japan for all inbound visitors or tourists. More needs to be done to further ease travel restrictions, starting with lifting quarantine for all vaccinated travelers, and removing both the on-arrival airport testing and daily arrival cap. I urge the government of Japan to take bolder steps towards recovery and opening of the country’s borders,” said Walsh.

Sustainability

Walsh also called on Asia-Pacific governments to support the industry’s sustainability efforts.

“Airlines have committed to achieve net-zero carbon emissions by 2050. A key to our success will be governments sharing the same vision. There are high expectations for governments to agree a long-term goal at the ICAO Assembly later this year. Achieving net zero requires everyone to shoulder their responsibility. And among the most important things that governments should do is incentivizing the production of sustainable aviation fuels (SAF). Airlines have bought every drop of SAF that is available. Projects are underway that will see a rapid increase in SAF production over the next years. We see SAF contributing to 65% of the mitigation needed to achieve net zero in 2050. That will require governments to be much more proactive,” said Walsh.

Walsh acknowledged that there have been positive developments in Asia-Pacific. Japan has committed considerable funds for green aviation initiatives. New Zealand and Singapore have agreed to cooperate on green flights. “Singapore’s cross industry International Advisory Panel on a sustainable aviation air hub is a positive example for other states to adopt,” said Walsh. He also called on ASEAN and its partners to do more, particularly looking for opportunities in the region to expand SAF production.Willie Walsh’s Keynote Remarks at Changi Aviation Summit