China air cargo slide expected as high capacity matches low demand

DESPITE recent stellar performances from the air cargo industry, there are widespread fears that harder times lie ahead of those engaged in the China trade.


"There is a capacity issue," CargoItalia commercial director Roberto Gilardoni told Hong Kong's Air Freight Asia 2011 conference. "The number of charters into the market is huge."


"We predicted more growth last year in China," he said. "We expected 25 per cent over 2009, but this was not uniform. Europe grew 15-20 per cent last year in the first six months, and then slowed, but capacity into Europe grew by 40 per cent. Airlines made mistakes," he said.


Thus, the outlook for air export freight rates and yields from China is weak after an influx of new aircraft and weaker demand, say airline executives, reported London's International Freighting Weekly, adding that this will likely result in rate war for cargo out of China.


BA World Cargo regional commercial manager John Cheetham also feared European austerity measures would dampen demand.


"In the short term, product launches like the new iPad will help boost the export market from China. Time will tell as to how austerity measures and stimulus packages and so on will impact consumer demand," he said.


But Mr Cheetham said that because it is illegal for airlines to make deals on capacity, so it was understandable all would scramble for the same market with extra capacity and lower rates.


IHS Global Insight analysts said China was stepping-up imports of components and inputs for processing exports, reflecting the improved outlook of the US economy.


But exports might not recover this month, they said, though new export orders bounced back last month after January's sharp fall, China's manufacturing sector saw weakening production and orders last month, according to the China Federation of Logistics and Purchasing.
(Source:http://www.schednet.com)