Cathay loses out as cargo demand dwindles

Cargo — By on July 23, 2013 at 3:32 pm

Cathay  Pacific  Airways  has  lost market  share  on  European  cargo  routes as freight rates sink on weak  demand from the troubled euro zone. The carrier expects the overcapacity  problem  in  the  cargo  market  will  only be corrected in the last quarter  of the year, reported the South China  Morning Post. “Cathay has lost some market share  during  the  downturn,  especially  to  Europe,”  said  cargo  director  Nick  Rhodes.  “If  the  rates  reach  a  level  where we cannot cover our operating  costs,  we  have  no  choice  but  to  reduce our  freight capacity.”

Cathay  has  halved  its  freighter  capacity  on  European  routes  to  11  freighters weekly from 21 last year.  Overall capacity fell 1.8 per cent in  the  first half of  the year. Cathay said earlier its cargo tonnage  dropped more than four percent last  month  from  a  year  earlier,  against  one  percent  cargo  growth  at  the  airport. Rhodes  said  Cathay  was  opting  to  carry  high-yield  or  special  cargo,  which was  still profitable. The  disequilibrium  would  only  be  corrected  in  the  last  quarter  when  new high-technology products were  launched, he  said. Manufacturers,  however,  are  still  pessimistic about the outlook for the  second  half  of  the  year. Apple  and  Samsung have moved  their manufac- turing  lines  from  mainland  coastal  areas  to  inland  cities  such  as  Chongqing,  Xian,  Zhengzhou  in  Henan and Ordos  in  Inner Mongolia. “Hong Kong carriers cannot benefit  as much as before as these shipments  from  the  inland  cities  opt  to  ship  directly  to  the  United  States  or  Europe,”  said  Sunny  Ho  Lap-kee,  executive director of the Hong Kong  Shippers’ Council. Foxconn Technology,  the manufac- turer of Apple products,  is  reported  to  have  hired  300,000  workers  at  its  plant  in Zhengzhou.

Zhengzhou Airport handled 150,000  tonnes of cargo  last year, up nearly 50  percent on 2011.  In April,  the State  Council approved Zhengzhou’s plan  to  build  a  second  runway  and  a  dedicated  runway  for  freighter  services. Foxconn  has  relocated  800,000  workers at its plant in Dongguan  to  other  plants  across  the  mainland,  leaving only 100,000 in the southern  city. Hong Kong  carriers will  now  face  greater  competition  from  rivals  for  the hi-tech shipments, which used  to be  transported  to Hong Kong  for  shipping overseas.

As  other  manufacturing  plants  also have relocated to other cities  or countries, air cargo in southern  regions,  including  Hong  Kong,  had entered a  low growth period,  said  Sunny  Yu  Ho-yuen,  the  chairman  of  ASR  Holdings,  a  logistics company. In the first six months, Hong Kong  airport  posted  a  two  percent  growth  in  cargo  tonnage  to  two  million  tonnes. Cargo  handled  by  the  Shanghai  Pudong  cargo  terminal  also  saw  slower growth of 1.5 percent  in  the  first half to 604,019 tonnes as the  airport faces the same problem as  Hong Kong.

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