Surge of China PAX services adds massive air freight capacity

The air cargo industry took a massive step towards post-Covid normality in January when China reopened for international travel, but just a few months later, the surge in air passenger services from China may drive air freight rates down further, as belly capacity grows amid weak demand.

Chinese airports, carriers and ground handling companies retained staff during the country’s extended lockdown period and had been readying operations for a swift return of pre-COVID services, ahead of January’s lockdown lifting.

Less than 20% of China’s wide-body fleet of about 500 planes was still in storage in the early weeks of 2023 and most planes had remained active on domestic routes, ready and available to quickly resume international operations. This accessible capacity has seen weekly China-Heathrow flights increasing ten-fold, from five to 54 over the past six months and more carriers planning to increase their China – Heathrow frequencies in the coming months.

London Heathrow airport is not alone in seeing flights from China increasing with Manchester announcing a return to pre-pandemic frequencies of services from Hainan Airlines (four a week) and despite the massive increases in belly-hold freight capacity that all these passenger services are bringing to the market, airlines are continuing to invest in full-freighter aircraft.

While the increases in scheduled flights to and from China are an important post-COVID milestone, all these new passenger and freighter services create over-capacity and weaken airfreight rates.

Bournemouth Airport announced last week that it will handle three A340 freighters a week from China, while the Belgian regional airport, Liege, will handle regular scheduled flights to China’s Nancheng Changbei Airport, three to four times a week on a 747-400F. A major Chinese eCommerce player has just introduced daily cargo flights into East Midlands, but with no indication of cargo for the return leg.

Reports in The Loadstar suggest that the East Midlands development is synonymous with the Chinese state’s willingness to subsidise export legs, which means non-Chinese carriers will have to not only compete with this influx of capacity, but also the reality that Chinese airlines can drop their rates even further, because the subsidy provides an extra revenue stream.

Metro work very closely with our customers to ensure that the greenest solutions are achieved within air freight. A tough ask but one we have risen to by partnering with Air France/ KLM in a fuel sustainability programme.

We work closely with our network and carrier partners in China and the UK to monitor market capacity and identify opportunities to use regional airports and particularly our Birmingham International Hub, that will benefit our customers, with some of the most cost-effective services available in the market.

There are solutions for every critical shipment, please EMAIL Elliot Carlile for insights and advice.