News / 'It's a bit busier, but certainly not a peak' says Etihad Cargo's Mouaniss

It’s tough being at the sharp end of a soft market. Just ask Soufyan Mouaniss, director west cargo commercial for Etihad. In charge of all sales going into Abu Dhabi and beyond, from Europe and the US, the market has been particularly challenging eastbound.

Etihad Cargo has one freighter service to the US, to Chicago, but filling the backhaul isn’t always easy, Mr Mouaniss told The Loadstar on the sidelines of the ACE air cargo event in Abu Dhabi last week.

“The market into the US, out of Europe, has been very soft with ample capacity, but the market out of the US is, nowadays, very challenging. The yields decline very fast, and it’s becoming very difficult to operate and be profitable.

“What we always do is try to find a healthy lane or a healthy route, but in case we don’t, we need to make harsh decisions in some cases and reduce frequencies.”

Mr Mouaniss, who was promoted to the role in October, having been a Europe area manager, said the writing had been on the wall for a while.

“I think most of us expected [the downturn] to happen somewhere back in 2022, where we came from the Covid environment where the yields were sky-high and capacity was very limited – but we had another bonus year in 2022.

“This is now really the year where we went back to pre-Covid levels, when it comes to capacity, or almost there. In some regions, we’ve already surpassed that level, so it’s a combination of an increase of capacity and also a drop of volumes. A lot of cargo is moving back from air freight to sea freight, which is making it a bit challenging for us to fill the flights and, most important, to fill them at the right yield.”

Soufyan Mouaniss

Even the recent filip in rates and demand hasn’t helped much, he said.

“I think for Europe, it’s definitely not a typical Q4 as we used to see in the past, in pre-Covid years. We’re not there yet, but it’s quite stable.

“I don’t think we can call it a peak. It’s a bit busier when compared with a couple of months ago, but certainly not a peak.”

Mr Mouaniss’s direction of travel means most customers stick to the spot market – where rates, according to the TAC Index, were up just 1.6% out of Frankfurt, compared with a 17% rise on the index overall in the four weeks to 4 December  – and only 17% down year on year. By contrast, Frankfurt and London outbound were down 47% and 59%, respectively. Out of Chicago, rates were up 8% on the month, but 42% down on the year.

Charters, however, are booming, with rates cited in the $1m+ mark. “Many 777F and 747F operators have a lack of availability now until January,” said one charter source.

Has that provided any lift for Q4?

“We do offer charters – but predominantly, currently, the charters are operating out of the east into the west. So as I am responsible for the west, charters just give us additional capacity back to Abu Dhabi.

“It’s important to be able to offer charter solutions to our customers, but from a western perspective, that means that we have additional capacity we need to fill and, in some cases, it could be very challenging for us.”

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Etihad Cargo, like many of its rivals, likes to focus on higher-yield, less seasonal cargo, such as pharma, a “year-round business”.

Mr Mouaniss explained: “Perishables is a similar product where we don’t get impacted by the seasons, but when it comes to the larger orders, the hi-tech, the dry cargo, that’s really linked to the season. But we see that at every end of the year, we see a rush and then January starts a bit soft.”

While yields remain higher than they did pre-Covid, the sudden rush of costs has meant that airlines still struggle.

“That’s affecting all of us within the industry.

“If we look at it from a cost perspective, you also see that the fuel prices went up, all the prices of the suppliers went up as well, which basically puts you on the same level as 2019, with a very, very small market.

“Of course, inflation is a part of it, but we also have geographic challenges. We have wars in the world. So all of these aspects, they influence the fuel prices, and the fuel prices are linked to the major commodities. So that’s all linked together. The cost prices may stabilise, but I don’t think the yields will ever drop back to the pre-Covid level.”

Low demand has been influenced by high stock levels, he explained.

“Very recently, we definitely see orders are increasing. But, overall in 2023, I think there was, in Europe for example, a warehousing problem, where the warehouses were packed because there were simply not enough orders to clear them. There is motion now, but to be able to clear everything, that’s still a question mark. We have to see how the upcoming months will develop.”

Airlines really, he said, have to wait until demand bounces back.

“It’s a cycle. So we have bad years, soft market conditions, and we always see the market bounce back eventually. Speaking to all the forwarders and customers within the region, most of them do expect that this will bounce back in the second half of 2024.

“But there are also customers and forwarders who say that 2024 will be a copy/paste of 2023, and the real peak or the real improvement will show in 2025. So the feedback I get does vary, but I like to stick to the one which is a bit more positive – and that’s probably the second half of 2024.

“But of course, I could be wrong.”