News / Airfreight capacity shifts from US to match falling demand

ID 105633986 © Jannygto

Airlines are pushing capacity into another key market – 50% more than last year – to compensate for lost demand from the US. But that region is “going through its own issues”. 

Richard Forson, CEO of Cargolux, told The Loadstar on the sidelines of Transport Logistic in Munich last week: “We see a lot more capacity being routed from China and Hong Kong back into Europe now. 

“We’ve taken out certain frequencies, but compensated in other areas into Europe,” he added. 

And it’s not just Europe-based carriers taking advantage of this growth market.  

Stanislas Brun, chief cargo officer at Etihad Airways, told The Loadstar: “We see Europe as one of our main markets. When you look at how we are balanced, we carry a lot out of Asia and Australia to the Middle East, Abu Dhabi, and then mostly to Europe. 

“It’s where we continue to grow, in terms of capacity. We’ll have two flights a day, and we’ll even start to have three flights in certain destinations, like Paris, next year. So, we continue to grow and to densify our network.” 

But Mr Forson noted that the Luxembourg-based carrier had “seen more competition”.  

He said: “Obviously, a lot of the carriers will go where the cargo is flowing, and so they will put capacity in to satisfy the demand coming into Europe.” 

According to Rotate’s live capacity database, total air cargo capacity growth from China to Europe between January and May was up 50% compared with the same period last year. At the same time, capacity from China to North America rose 26%.  

Mr Forson remained cautious that the European market would yield the same opportunities as in the US. 

“Although Europe has a bigger population, I don’t see it consuming at the same level as that which the US consumed on the economy side,” he explained.  

“Europe is going through its own issues. It’s got the tariff negotiations with the US. It’s also got the issue of increased defence spending. So, I think the consumers in Europe are a bit more circumspect in how they spend compared to those in the United States. I think savings levels in the EU have really gone up, household savings. So more conservativeness.” 

Currently, however, the market appears lucrative for carriers as rates stay firm – Freightos Air Index data shows average air freight spot rates from China to Europe at around $4.82 per kg. 

Having rebounded from a lull of $3.68 at the end of February, spot rates for this trade have hovered around the $4.80 mark since April.