Korean Air Cargo suspends transport and cargo handling services at three hubs
Date: Wednesday, July 17, 2019
Source: The Load Star
Korean Air, which saw first-quarter cargo revenue fall 7.6% year on year, is to suspend its services at cargo terminals in three cities.
In a bid to improve its financial position, the carrier said it would stop transport and cargo handling services at Gwangju, Cheongju and Daegu on October 1.
In its first-quarter results, released in May, the carrier reported freight tonne kilometres down 9.4% and a net loss of KRW10bn ($9.2m), which it blamed on US-China trade tension and a strong dollar, respectively.
Local media reports analysts saying that, in the second quarter, the carrier saw cargo sales slump further, 13.6% year on year – although it does not appear to have released these results yet.
Partner Delta has also struggled. It saw a 17% fall in second-quarter cargo revenue, to $186m, while cargo ton miles fell 12.2%. Overall, the air cargo market has fallen 3.3% in the first five months, compared with a year ago.
Walter Cho, Korean Air chairman and CEO, told IATA last month: “The cargo market changes every year and it’s very hard to predict the future. There is no doubt that we are in a downturn, and that will affect results.
“The airline is doing what it can to mitigate the challenges. We have new, fuel-efficient aircraft and there is also a new cargo system to make reservations and operations more efficient.”
The carrier appears to be retaining its freighter capacity of 23 widebodies, of which 12 are 777s and the remainder 747s.
But the future continues to look depressed. According to DHL’s global trade barometer, released last month, “the air trade outlook in South Korea is suffering, mainly due to exports, which are expected to weaken as most contributing industries are expected to contract”.
However: “On the other hand, air imports are predicted to grow modestly, driven by temperature or climate-controlled goods and backed by the modest growth of machinery parts and basic raw materials. Hi-tech is expected to weigh down on the air import outlook.”
Declines are also expected in ocean freight.
“South Korea’s high reliance on exports has rendered its economy particularly susceptible to the global downturn in trade, particularly as its key industries like semiconductors and technology have been acutely affected by recent trade disputes,” SP Song, managing director, DHL Global Forwarding Korea, told media last month.
“The evolving nature of global trade disputes will likely dictate the course of South Korea’s own trade growth in the coming months, with domestic demand aided by government stimulus measures and broader overseas diversification likely to yield opportunities for South Korean businesses looking for increasingly rare growth at home.”