Chapman Freeborn blog

VIP & Private Jet Charter

Peak season slow – but opportunities still exist for forward-thinking cargo charter companies

Traditionally, the final four months of the year were viewed as the peak season for the air cargo industry – with electronic equipment, consumer goods and high-tech products flooding out of China and Asia to markets in Europe and North America.

However, with September now upon us, the industry looks set to endure another relatively flat season marked by low consumer demand and a surplus of freighter aircraft capacity.

Adding to the challenges facing cargo businesses, last month the Chinese government also introduced its “Tax Policy Concerning Nationwide Implementation of VAT Pilot Program for Transport and Modern Service Sectors” – meaning a six per cent rise in shipping costs for international shippers importing and exporting freight from and to China.

Commenting on the challenges facing the market, Eric Erbacher, Chapman Freeborn’s regional director for Asia, said:

“There is likely to be a mini surge of demand on air cargo capacity, triggered by new product launches from electronic giants such as Apple, Sony and Microsoft. However, this temporary spike may last only three to four weeks, and it won’t remove the imbalance of supply of capacity and demand. As long as the key markets in USA and Europe are in an uncertain economic condition, the demand on air cargo capacity will be highly fluctuating and difficult to project forward.”

However, the outlook is not all bad, and there are still some positive areas that can be identified, according to Erbacher.

“The traffic on the Trans-Pacific lane shows a stable yield development as airlines are smartly adjusting their schedules in order to escape from the problem of overcapacity. Another positive note is that there is strong demand into Africa and South America, where specialised full charter and split charter solutions are in demand.”

It’s also the case that major carriers are now displaying greater operational flexibility in terms of charter requests. Chapman Freeborn has continued to see strong demand for niche charter services – including project cargo requirements for energy and mining.

While this year’s peak season traffic out of China and Asia might be slow, there are also still windows of opportunity for companies willing to invest in setting up cargo services in new and emerging markets.

Earlier this year, we signed an exclusive contract to place a L382 Hercules aircraft in Australia for outsize cargo charters – and we recently launched our newest venture in Libya, where we are now operationally managing an AN-26 aircraft.

Forward-thinking companies are also forging new partnerships to maximise business opportunities – for example our recent agreement to support Swiss WorldCargo with all its third-party chartering requirements (a partnership which follows the earlier launch of a strategic cooperation deal between us and Lufthansa Cargo).

In the current climate, supply chain lead times are often short with clients keeping supplies and upfront project costs low until materials are required. International charter companies are then well placed to step in and utilise excess capacity for full charters – as well a back-loads, front-loads and part charter solutions at short notice.