To Our Valued Customers:
Here is a short list of what we are seeing so far this week:
Breaking News: The New York Times has reported that the Trump Administration plans to block Chinese Airlines from flying in/out of the USA beginning June 16th. More will follow as to the legitimacy of this restriction and the affects it will have on the air cargo industry.
Air Rates Stall Amidst a Steep Decline: Week-to-week airfreight rates remain flat despite a continued drop in PPE demand. The need to ship medical supplies by air, or lack thereof, is now being replaced by commercial goods. While this uptick in “normal” traffic has been enough to maintain rate levels, it has fallen shy of creating another surge.
Continued Improvement in Shanghai: Backlogs at PVG airport have been reduced down to very minimal levels. All remaining PPE has been flagged for examination and makes up what is left of any backlog situation. The situation should only continue to improve.
Capacity at 42% of Normal Levels: Passenger aircraft cargo space, also known as belly space, has shrunk by 75% year-over-year while freighter aircraft space, also known as Cargo Aircraft Only (CAO) space, has increased by 15%. The final net decrease in capacity has been approx. 42% below normal levels. Meanwhile, freight volumes have been hovering at about a 31% decline. The imbalance has been the main factor in recent, record-breaking airfreight rates.
International e-Commerce Plagued by Delays: Online retailers, whom mostly rely on USPS for their international deliveries, have been challenged by undelivered or delayed goods. Up to 20-25% of orders have been affected and delays for deliveries have exceeded four weeks. In addition to chartering aircrafts, USPS has resorted to sending packages by full container ocean freight. The main reason for these bottlenecks is the capacity crunch between the USA and Europe. USPS relies primarily on commercial carriers for transportation and, unfortunately for them, there are not many signs conditions will improve any time soon,
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New Air Service to Support Food Products: China Southern has rolled out a 777 freighter service from Zhengzhou International Airport (CGO) in support of this season’s harvest. The service began on May 31st and will service MIA, SAN, ORD, and LAX airports for a total of 135 flights.
More Trouble for Airline Industry:
More than a dozen carriers have filed for bankruptcy thus far.
American Airlines announces layoffs of about 5,000 jobs including both management and support. Boejing announces layoffs due to order cancelations and lack in demand for new orders.
Revenue losses for the industry is forecasted to be $135 billion for the first six months alone.
Recovery to pre-Covid 19 levels is not expected until at least 2023.