Cargo volumes at Cathay Pacific in October continued a pattern of double-digit contraction as strict China COVID policies hamper flight operations and the traditional fall surge in airfreight activity ahead of the holidays failed to materialize.
Hong Kong-based Cathay Pacific, a major combination carrier with a fleet of 20 Boeing 747 freighters, has tumbled from the fifth- to the ninth-largest cargo carrier in the world in the past year, according to the International Air Transport Association.
Cathay reported that revenue-ton kilometers, a measure that helps determine profitability for transport companies, decreased 25% year over year and were down 36.2% compared with October 2019. October’s cargo figures improved 3.3 points from September, an indication shipping activity inched up instead of leaping ahead as is traditionally the case in the rush to stock shelves for the holiday shopping season.
Raw tonnage carried fell 11%.
The slowdown in the global economy and high retail inventory levels have suppressed demand for air and ocean freight this fall, as have continued COVID-related lockdowns in several Chinese cities that have diminished productivity for many factories there.
Cathay Pacific had 10% less freighter capacity than a year ago because it cut back cargo-only passenger flights, partly due to forecasts for a muted peak shipping season.
“Our expanded network in Europe was a bright spot with double-digit month-on-month growth in October as we resumed more of our passenger services. This provided our cargo customers with more options, especially for specialized shipments such as pharmaceuticals,” Ronald Lam, the chief customer and commercial officer, said in a news release.
Cathay Pacific’s decreased throughput is roughly in line with the rest of the year. In the first 10 months of 2022, revenue-ton kilometers decreased 31% compared with the same period for 2021.
The distance-based metric fell 5% more in October than absolute tonnage, reflecting the fact that pandemic travel restrictions and crew quarantine measures severely limited long-distance flying. The situation is starting to improve after Hong Kong recently eased quarantine requirements for inbound arrivals and crews, allowing Cathay Pacific to ramp up international widebody flying.
The company says it expects to add 3,000 flights and reach one-third of pre-pandemic passenger capacity by the end of the year. Available seats will be 70% of 2019 levels by the end of 2023, a marked contrast with many European and North American rivals that are already well above that figure.
“While the peak season this year will be subdued when compared to the unprecedented peak last year, we still expect to see increased tonnage driven by seasonal e-commerce events as well as the start of the perishables season in the Southern Hemisphere,” said Lam. “As the belly capacity provided by our passenger flights increases over the months ahead, we are extending the reach of our network and increasing the choice of schedules for our air cargo customers.”
Hong Kong pharma capacity
Meanwhile, Cathay Pacific Airways said its Hong Kong terminal business, Cathay Pacific Services Ltd., recently opened a 13,450-square-foot cold storage facility for pharmaceuticals at its Hong Kong cargo terminal. The Cathay Pacific Cargo Terminal serves many airlines at Hong Kong airport. The specialized storage section features 60 sensors that provide real-time temperature monitoring, temperature-controlled docks with airtight seals for trucks, and charging points for containers with refrigerators.
The new pharmaceutical center is capable of processing more than 292,000 tons of pharmaceuticals per year, doubling the cold-storage capacity of the Cathay Pacific terminal. It is the largest dedicated pharmaceutical-handling facility at the airport, according to the airline.
Cathay Pacific said the rising demand for air travel is improving operating cash flow for the second half of the year, but the company still anticipates a “significant” loss for the year.
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