FEDERAL government announcements regarding passenger movement restrictions in an effort to tackle Covid-19 has had an immediate effect on the movement of air cargo to and from Australia.

Qantas and Virgin Australia have ceased international services – Qantas until at least the end of May – Virgin Australia to June 14. International carriers have suspended or significantly reduced passenger services to Australia, until the end of May, possibly longer, depending on the global recovery from Covid-19.

The removal from the market of the belly hold capacity of passenger aircraft, leaves a massive capacity shortfall which can’t be filled by freighter aircraft. The lack of passenger flights with bellyhold capacity, combined with the limited number of freighter services has seen freight rates increase substantially.

Passenger airlines are being incentivised by higher freight rates, to convert passenger aircraft to carry freight only. This tight demand has led to scheduled freighter aircraft services in some markets being diverted to the more lucrative full charter market.

China recovery

The ongoing recovery of the China market and the increasing volumes of goods to be moved will put further pressure on airfreight capacity and rates, as air cargo capacity continues to be scarce and expensive. Though, this situation may change depending on further government measures to counter the spread of Covid-19, business and consumer demand and the duration of the recovery.

Australia

  • Freighters continue to operate – scheduled and charters
  • Freighter operators – Qantas, Emirates, Singapore Airlines and Cathay Pacific have added freight capacity to the Australian market
  • Passenger to Cargo (P2C) aircraft services emerging
  • Operators of passenger services are being approached by shippers/forwarders to utilise the bellyhold capacity in passenger aircraft as a charter ‘freighter’ service.
  • Last Wednesday, two Delta Airlines passenger aircraft (without passengers) were used as ‘freighter’ charters ex USA to Sydney
  • Scheduled P2C services have commenced by Emirates, Cathay Pacific and Air China. Some airlines such as Malaysian Airlines, Sichuan, China Eastern and China Southern have advised availability to operate either freighter aircraft or ‘passenger to cargo’ (P2C) aircraft capacity on a charter basis.
  • Some carriers such as Lufthansa, Austrian Airlines and Malaysian are reportedly using the passenger cabin to carry cargo on seats.

Australian government International Freight Assistance Mechanism

The Australian Government has announced a new $110m initiative to re-launch hundreds of flights to deliver fresh produce to key international markets as part of a $170m boost to an export sector grounded by the coronavirus emergency. The International Freight Assistance Mechanism will initially focus on the key markets of China, Japan, Hong Kong, Singapore and the UAE, with four key departure hubs: Melbourne, Sydney, Brisbane and Perth. Return flights, under the program, will provide an opportunity for Australia to import medical equipment and medicines. The International Freight Assistance Mechanism will inject significant airfreight capacity into the market which will alleviate some pressure on the capacity shortfall in the wake of the cancellation of regular passenger flight services.

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Cargo terminal operators The three cargo terminal operators that handle the international airlines – Qantas Freight, Menzies Aviation and dnata – have adjusted their operating hours in response to the capacity reductions. The situation is fluid as the CTOs respond to carriers’ daily announcements of revised flight schedules. AFIF is continuing to engage with our members, government, the carriers and CTOs on issues affecting freight logistics during this challenging time.

Stuart McFarlane is business affairs manager for the Australian Federation of International Forwarders

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