Air cargo carriers slash China flights as coronavirus measures widen

Airlines around the world are drastically reducing passenger flights to China as the novel coronavirus threat grows, although the seasonal low freight volumes at present are likely to limit any immediate impact on shippers despite the cutbacks in belly cargo capacity.

The air cargo handling division of British Airways and Iberia, IAG Cargo, Wednesday announced it has temporarily suspended all air cargo services to and from China on the advice of the UK foreign office. IAG Cargo is part of the International Airlines Group that operates freighters and belly cargo in its portfolio, which includes British Airways World Cargo, Iberia Cargo, and Aer Lingus Cargo.

The carrier joins Cathay Pacific, Air Canada, and United Airlines in suspending or cutting back the frequency of flights to China.

Cathay Pacific and its regional subsidiary Cathay Dragon announced the carriers will slash their 480 weekly flights to mainland China “by 50 percent or more” from Jan. 30 to the end of March. Air Canada will cancel some of its 33 weekly flights to China, and United Airlines will suspend 24 of its trans-Pacific flights to Beijing, Shanghai, and Hong Kong from Feb. 1-8.

A spokesperson for Lufthansa Cargo told all its flights to and from China were currently operating according to schedule. “However, as usual in such situations, we are following developments very closely and will decide on further action in cooperation with the responsible authorities if necessary,” she said.

Beijing has extended Chinese New Year holidays until Feb. 3 due to the spread of the virus, with reports that some business and factories have been asked to remain closed until Feb. 10. All air traffic to Wuhan, the Yangtze River port city and the origin of the coronavirus, was suspended last week.

Extended disruption could move freight rates

Freight rate marketplace Freightos warned this week that an extended shutdown of commerce could impact both ocean and air cargo rates. In its weekly update, Freightos said ocean rates traditionally remain elevated and short-term capacity tight following Chinese New Year as container carriers accommodate both the backlog of shipments that could not be moved before the holiday and the new orders being placed as the factories came back online.

“Should the shutdown get extended by a week, the backlog would be doubled, pushing freight rates up and likely leading to delays for many shippers,” Freightos said. “Limited trucking capacity could also cause some cancellations. This backlog could also motivate some time-sensitive importers to shift modes from ocean to air.”

Yet even as carriers began to cut flights, air freight rates from Asia to Europe have been rising, according to Freight Investor Services (FIS). Compared with prices just before the Chinese New Year, it said TAC Index rates from Shanghai to Europe were up 9.16 percent, Hong Kong to Europe was up 1.43 percent, Shanghai to Amsterdam up 19.4 percent, and Shanghai to London was up 4.30 percent.

FIS said in a market update the full effect of the flight cutbacks on rates was not yet known, adding that freight volumes were seasonally low and could be hit by factory closures and quarantine measures.

“Freight businesses should pay close attention to any subsequent backlog of volume that will be released into the market if and when quarantine measures have been retracted,” FIS advised.

Source: JOC

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