News / General airfreight in the doldrums – but charters are soaring

© Alexey Petrov

While scheduled airfreight operations continue to be buffeted by economic headwinds, the going has been smoother for the charter segment this year – and it is currently experiencing very strong rates.

The Loadstar has heard unconfirmed reports of pricing hitting $1.3m for a long-haul charter, with charter operators sold-out of capacity for the rest of the year.

There has been demand for charters worldwide from a host of sectors, reported Dan Morgan-Evans, group cargo director of Air Charter Service (ACS) – although he added that he hadn’t seen rates break the $1m mark yet, but said pricing had held up better than in the general airfreight market.

“We’ve been pretty busy. It’s been a very positive year – less than the past three years, but good,” he said. “Charter held up better than the general cargo market.”

Neil Dursley, CCO of Chapman Freeborn, said it is “rather a crazy market currently”, noting the lack of widebody freighter availability, “especially China-Europe for ecommerce”.

“Those prices have increased to the region of approx. $600k. But I just quoted a client for China-Brazil and received pricing up to $1.8m – which is crazy.”

He added that a 747F from Europe to Africa is pricing from $300K with one operator, $400k with another – and $1.1m with a third.

“Many 777F & 747F operators have lack of availability now until January. So despite this being a challenging year, the prices have indeed increased considerably in the past month. We are finding that quite a few operators have had significant AOG issues with their older 747Fs and some have disappeared from the market, so now with e-commerce business increasing as it always does this time of year, it is forcing the prices up again.”

Mr Dursley noted that several specific industry verticals were driving demand, including the energy sector (Oil & Gas); automotive; and government / humanitarian business. “They’ve all increased significantly this year due to the many natural disasters and human conflicts.”

Mexico has been one of the stars of charter demand. According to Mr Morgan-Evans, it has always been ‘a decent market’, but now it is getting an additional boost from near-shoring. ACS opened an office in the country in February and is recruiting to meet strong demand.

The charter company also set up a branch in Thailand this year, one of the automotive centres in Asia. And demand from the oil and gas sector, for humanitarian missions and for entertainment has been robust, added Mr Morgan-Evans.

“Ecommerce is a big driver in terms of people wanting aircraft. There’s a lot of demand from the Far East now,” he said.

He has not seen a recent surge in airlines chasing charter business, but their focus on this sector is definitely much higher than in the past. He said: “Twenty years ago airlines that did scheduled services didn’t look for charters, but the airfreight market is always fluid, with boom or bust scenarios, so people realised they had to have a hybrid system; they have to have that dynamic side.”

Air Canada and Cargojet are two of many carriers that decided, in light of the decline in the airfreight market, to scale back their freighter expansion plans. AC shelved plans for two 777 freighters, converting the order into a larger deal for 787-10 passenger planes, while Cargojet sold three of seven 777s, acquired for conversion into all-cargo configuration, and is looking for buyers for four 757Fs that became surplus after an operational restructure.

While their scheduled cargo flights have experienced some turbulence, the carriers fared comparatively well in the charter market after the lull in demand for scheduled service freed-up freighters for charter opportunities. For Cargojet, this has resulted in an increase of about 30% in charter revenue.

It has helped that the near-shoring trend is driving massive investment in Mexico, led by the auto industry, which has driven charters from North America as well as from Europe, reported Matthieu Casey, MD, commercial of AC Cargo, adding that the aerospace sector has been another strong market.

And Cargojet chief strategy officer Jamie Porteous added: “We do charters to Mexico, but there is demand all over the world.”

The Canadian cargo airline was the first to fly humanitarian charters to Maui after the island was ravaged by wildfires. It ran six charters to the stricken island, having obtained cabotage exemption from the US authorities.

Mr Casey reckons AC will see its charter business grow. Until recently its freighter contingent was too small to allow forays into the charter sector, but recently, with seven all-cargo planes in the fleet, this has become a more regular business, he said. Next year, the airline will receive three more freighters.

Most pundits do not expect demand for general airfreight to pick up significantly before the second half of 2024. Charters – for now at least – seem to be the strongest part of the market.