Air cargo demand to rise in second half, say Cathay Pacific, FedEx

THE second half of 2011 is expected to experience an increase in air freight demand ahead of back-to-school and holiday shopping in the US and Europe that may well offset rising fuel prices, say express delivery giant FedEx and Hong Kong's Cathay Pacific Airways.


Despite a slow first half, shippers are predicting a surge in year-end consumer demand, said Cathay's new CEO John Slosar, a demand he expects to meet with the delivery of six 747-8 freighters every two months from August to October, delegates were told at Singapore's meeting of the International Air Transport Association (IATA).


"This year we think it's looking just like a regular year, where the first half is weaker and the second half will be stronger," Mr Slosar said, in response to a 12 per cent slowdown in volumes at its hub Hong Kong Air Cargo Terminals Ltd (Hactl) in April.


Consumer spending might balance out a year-on-year 56 per cent oil price increase based on revised Brent crude to $110/barrel from $96/barrel, and the slow-down in US pay increases for the first time in eight months.


Said FedEx's FedEx Express unit chief David Bronczek: "The momentum will continue as long as the oil issue doesn't throw a wrench in the works."


The IATA cargo traffic forecast predicts a 5.5 - 4.3 per cent increase this year with growth of cargo yields up four per cent. However, its profit forecast halved on the back of costs, Middle East unrest and fall-out of Japanese quake and tsunami down to $4 billion.


Asia-Pacific region will be the most profitable, carrying 40 per cent of global air cargo and making a profit of $2.1 billion against North America's net gain of $1.2 billion and Europe's airlines' $500 million.


According to data complied by Bloomberg, Cathay Pacific showed strong cargo sales increases of 29 per cent, slightly below Korean Air Lines' 33 per cent, but soaring above Delta's and United Continental's five per cent. Cathay's gains are offset by the costs of development of Hong Kong airport's cargo terminal costs of HK$5.5 billion (US$708 million).
(Source:http://www.schednet.com)