Flowers bloom briefly in a soft air cargo market
Anecdotal evidence from across the air cargo market suggests that several carriers are chasing market share – in particular one Gulf carrier and at least one from Europe. And with more than enough capacity in the market, airlines which care about their break-even points are struggling to attract customers.
“To put it bluntly, some of our competitors have no idea of the value of their capacity, or what it is that they are selling,” said one airline cargo chief.
“I know what my costs are; I know where I stand, and at a certain price it is loss-making.”
Ashwin Bhat, head of SwissWorldCargo, agreed that some pricing at the moment “makes no sense”.
Figures released by WorldACD last week showed that yields fell 15% in 2015, while volumes inched up 2%.
Despite the soft market, impacted by longer Chinese new year factory closures as the slowing economy bit into manufacturing, the flower business has given some airlines additional volumes in the last couple of weeks.
LATAM announced this morning that it has operated three times the normal number of cargo flights between January 18 and February 7. The airline and its affiliated carriers carried some 9,050 tons of flowers, or 26% of the region’s total flower market, which predominantly is based in Ecuador and Colombia. Most were destined for the US.
Newcomer Cargologicair said last week it had operated two flower charters to Nairobi, while Lufthansa and IAG Cargo also reported good volumes.
However, the flower rush is now over.
“The market is soft,” said Mr Bhat. “But it is the market, and we have to play within it. So we have to make smart choices.
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