News / Sky Lease Cargo changes course for more lucrative China-US routes

Sky Lease Cargo, a Miami-based freighter operator, has pivoted from Latin American services to China-US operations, where rates are currently highest.

Earlier this month the carrier, which now operates just two 747-400Fs, launched a service from Nanjing, via Anchorage, to New York; westbound carrying e-commerce and eastbound flying aquatic animals, such as Boston lobsters. Sky Lease’s other aircraft is also on the transpacific, between Xiamen and Los Angeles.

In the past, the carrier concentrated on Latin American services, last year between Miami and Quito on behalf of wholesaler Solent Freight Services. However, increasing numbers of airlines appeared to be adding capacity in the region at the same time, putting downward pressure on rates.

Currently, according to the TAC Index, rates between China and the US have gone up nearly 6% in the past week, to $4.30/kg – although rates on the return leg are weak, at $1.18/kg. And from the US to South America, rates have slipped 1.6%, to $2.41/kg.

Low rates on the transpacific backhaul could make up for the high cost of US lobsters for the Chinese.

US lobster exports to China slumped during the Trump presidency, when the trade war with China saw retaliatory tariffs of 25% and then 30% applied on US lobster exports, a move which boosted Canada’s lobster export market considerably. US lobster exports fell by more than 60%.

The tariffs are now under review, but according to the Peterson Institute for International Economics, US lobster sales to China fell by 12.1% between 2021 and 2022 – while their price rose some 28%. And, with current poor relations between the two countries, the tariffs may be set to stay.

The transpacific move is a marked departure for Sky Lease, which has had something of a troubled past. Its sister carrier, Centurion Air Cargo, closed down in 2018 over financial issues. Sky Lease continued, but retired its MD-11Fs in February 2020 – just before the pandemic – and now has just the two 747Fs.

The pandemic did boost its coffers, however, although its revenues were not significantly higher, as it was operating fewer aircraft. In 2018, for example, revenue was $125m; in 2021, it was $113m. But profitability improved: in 2018, net profit was $12.4m; but in 2021, was $48m, according to CH Aviation.

In 2021, Sky Lease was fined $422,500 by the FAA for flying its two aircraft without the correct avionics equipment.