Cargo volumes at Cathay Pacific continued a double-digit contraction pattern in October as strict COVID guidelines in China hampered flight operations and the traditional drop in air cargo activity ahead of the holiday failed to materialize.
Hong Kong-based Cathay Pacific, a major combination airline with a fleet of 20 Boeing 747 freighters, fell from the fifth to the ninth largest cargo carrier in the world last year, according to the International Air Transport Association.
Cathay reported that revenue tonne-kilometres, a metric that helps determine the profitability of transportation companies, fell 25% year over year and fell 36.2% compared to October 2019. October freight figures improved by 3.3 points from September, indicating that shipping activity has increased slightly instead of jumping ahead, as has traditionally been the case, to replenish shelves for the holiday shopping season.
The raw tonnage transported fell by 11%.
The global economic slowdown and high retail inventories have weighed on demand for air and sea freight this fall, as have ongoing COVID-related lockdowns in several Chinese cities, which have reduced productivity at many factories there.
Cathay Pacific had 10% less freighter capacity than a year ago because it reduced passenger-only cargo flights, in part due to forecasts for a muted peak shipping season.
“Our expanded network in Europe was a bright spot with double-digit monthly growth in October as we resumed more of our passenger services. This gave our cargo customers more options, particularly for specialty shipments such as pharmaceuticals,” said Ronald Lam, chief customer and commercial officer, in a press release.
Cathay Pacific’s decreased throughput is roughly in line with the rest of the year. In the first 10 months of 2022, revenue tonne-kilometres decreased by 31% compared to the same period of 2021.
The distance-based metric fell 5% more than absolute tonnage in October, reflecting the fact that pandemic travel restrictions and crew quarantine measures are severely limiting long-haul flight. The situation is beginning to improve after Hong Kong recently eased quarantine requirements for incoming arrivals and crew, allowing Cathay Pacific to step up international wide-body flight.
The company expects to add 3,000 flights by the end of the year and reach a third of its pre-pandemic passenger capacity. Seats available will be 70% of 2019 levels by the end of 2023, a stark contrast to many European and North American competitors who are already well above that number.
“While this year’s peak season will be subdued compared to last year’s unprecedented peak, we still expect increasing tonnage, driven by seasonal e-commerce events as well as the start of the perishables season in the southern hemisphere,” said Lamb. “As the belly capacity of our passenger flights increases in the coming months, we are expanding the reach of our network and increasing the choice of flight schedules for our air cargo customers.”
Pharma capacity in Hong Kong
Meanwhile, Cathay Pacific Airways announced that its Hong Kong terminal business, Cathay Pacific Services Ltd., recently opened a 13,450-square-foot cold storage facility for pharmaceuticals at its Hong Kong cargo terminal. Cathay Pacific Cargo Terminal serves many airlines at Hong Kong Airport. The specialized storage area has 60 sensors that provide real-time temperature monitoring, temperature-controlled docks with airtight seals for trucks, and charging points for containers with refrigerators.
Capable of processing more than 292,000 tons of pharmaceuticals per year, the new pharmaceutical center doubles the cold storage capacity of the Cathay Pacific terminal. According to the airline, it is the largest dedicated pharmaceutical handling facility at the airport.
Cathay Pacific said rising demand for air travel is improving operating cash flow for the second half of the year, but the company still expects a “significant” loss for the year.
More FreightWaves/American Shipper stories by Eric Kulisch.
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