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© Jakub Rutkiewicz

Lufthansa Cargo is betting on China’s economy growing and is upping its freighter capacity to the country – despite continued weak demand.

Airfreight rates continue to fall, according to TAC Index figures, which saw the overall index drop 5.8% last week. China-Europe fell nearly 20% in the week, to $3.92, while Frankfurt to Shanghai dropped more than 20%, to $1.44.

Unperturbed, Lufthansa Cargo this morning said it would expand its freighter network for its summer schedule, starting 26 March.

“Looking at the Chinese market in particular, we are seeing an upturn in economic activity and, thus, also an increasing demand for reliable and quality transport solutions by airfreight for sensitive and high-value goods. Accordingly, we have specifically adapted the flight schedule to meet the demands of our customers,” said Ashwin Bhat, Lufthansa Cargo’s chief commercial officer.

The carrier will offer ten 777 freighter flights a week to Shanghai and, two of these will also go to Chengdu, doubling LC’s capacity there. Frankfurt to China rates this week fell 17.3%, but Lufthansa is also increasing its Hong Kong flights from five to six, including one stop in Almaty.

The carrier is also increasing its capacity to India, with a combined serviced via Mumbai to Hyderabad twice a week. In total, the carrier will operate 79 weekly 777F services.

The TAC Index notes that capacity is rising, both in belly capacity and freighters, more of which are entering the market, in particular through conversions.

It added: “The lower quintiles in the price ranges were continuing to fall back towards pre-Covid levels – indicating spot prices still falling and contracts renegotiated at lower levels. For carriers, the continuing drop in rates was softened by jet fuel prices falling 16% in January, according to Platt’s data.”

The transatlantic – despite US inflation – has been the surprise star of the show in January, according to Xeneta’s Clive, with volumes up 6% year on year, although rates were down 4% from December.

In ocean, rates on the eastbound transatlantic were up 230% on 2019 pre-pandemic rates, but in air they were only 41% higher.

Xeneta’s chief airfreight officer, Niall van de Wouw, sounded optimistic, in what will no doubt be a fillip to carriers like Lufthansa Cargo which are planning their summer season.

“The early Chinese new year might be causing some noise in the January air cargo data, with factories there closing ahead of the holiday, contributing further to a weak global market producing load factors at a level we haven’t seen for some time.

“So, there is still a high level of uncertainty, but if rates haven’t yet reached the 2019 level in value in the current climate and, with an expectation that inventory levels will need restocking at the end of Q2 and Q3, then it’s unlikely we will see spot rates return to the pre-pandemic level, unless this happens soon.

“But this, of course, partly depends on consumers spending in a similar fashion to that we have seen recently,” he added.

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