De minimis cut won't hurt demand for Chinese ecommerce, but for air cargo?
While most companies are professing ‘uncertainty’ over the potential impact of the closure of the ...
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HD: DIY RE-PRICINGZIM: A RISING TIDE LIFTS ALL BOATSTSLA: CHINA THREATDAC: KEY REMARKSDAC: SURGING GM: SUPPLY CHAIN WOESMAERSK: ROTTERDAM TEMPORARY SUSPENSION OF OPERATIONSATSG: OWNERSHIP UPDATERXO: COYOTE FILLIP GONEGM: SUPPLY CHAIN HITBA: CUT THE FAT ON THE BONER: STEADY YIELDMAERSK: SELL-SIDE UPDATESDAC: TRADING UPDATE OUT SOONTSLA: FEEL THE PAIN IN CHINAWMT: GUESS WHATXPO: SURGINGAMZN: LOOKING FORWARD
Cathay Cargo is committed to being “flexible” this year, in the face of global uncertainty – but manufacturers in Hong Kong seem relatively confident of a good year.
Although the PMI for Hong Kong has slipped one point since October, it remains above 50, at 51.1. Only Taiwan, Philippines and India are noticeably higher in Asia; Vietnam, much touted as this year’s next big export destination, has slipped to below 50.
Cathay Cargo director Tom Owen noted in a customer newsletter that: “The freight business is always unexpected… Even if the situation changes, we can respond quickly and continue to maintain good performance.
“With the new US administration and the many factors currently affecting global trade, changes in trade flows are still unknown, so we will pay close attention to our flight schedules, route network optimisation, and freighter fleet deployment. In this case, remaining flexible and mindful in allocating capacity will be key.”
Cathay said that while ecommerce had grown well, it had also seen greater demand for special products.
“Although the performance of the ecommerce business is eye-catching, the increase in cargo volume of special freight transportation solutions cannot be ignored.”
Mr Owen noted the success of the carrier’s special cargo and urgent parcel products – with more to come this year, including new products for fresh goods, animals, and dangerous goods delivery.
“These innovative solutions were successfully put into the market. Not only did freight volume record a significant increase, but the customer net promoter score also increased steadily.”
Metro Shipping told customers last week: “The Asia–Europe airfreight tradelane must strike a balance between resilience and adaptation. While commodities such as automotive parts, pharmaceuticals, garments and high-tech goods provide a stable foundation, diversification across more verticals will reduce vulnerabilities.”
It added that “high-value and time-sensitive automotive components remain key drivers of growth”.
Cathay’s innovative mainland service, via Dongguan Cathay Cargo Terminal, has also gone well, said Mr Owen.
“Its operating results are encouraging. As we begin to study the import business for transporting special cargo in this key region, the growth in cargo volume in the region will continue. For example, there will be endless development opportunities in transshipment of fresh goods to the Greater Bay Area via Zhuhai and Macau.”
Over the previous year, Cathay has added some 12% capacity to the market out of Hong Kong, while overall capacity ex-Hong Kong has risen 17%, according to Rotate.
Into Hong Kong, the market has grown capacity by 16% in the past year, over the year before. As we head into Chinese new year, capacity from other carriers has dipped. Dimerco said last week: “The Hong Kong export market is expected to shift from tight, to an upturn, due to the CNY holiday in early February, with fluctuations anticipated in mid-February as Chinese factories resume normal production.” It added that although the market was relatively strong, rates remain stable.
But last week’s TAC Index data noted: “Average rates on the busiest lanes out of China continued to fall both to Europe and the US. The index of outbound routes from Hong Kong slipped 3.0% WoW, though [was] still up 14.0% YoY.
Cathay added that it now sees nearly 70% of bookings completed via digital platforms, and would develop its ‘manage my booking’ feature this year. It also noted its return to Brussels, reactivating the pharma.aero corridor.
Mr Owen concluded: “This year has the potential to be an inflection point after a busy and successful 2024: especially in regard to ecommerce, which gave us good base loads in 2024, and is now an area of interest as the US administration changes. We can start this year with one certainty: it is never wise to underestimate air cargo’s capacity to surprise.”
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