As cargo helps carriers of the New Zealand flag return, efforts are being made to ensure sufficient air shipping capacity for the country’s main seasonal exports.
In a devastating year for the air industry, Air New Zealand recorded its first financial loss in nearly two decades and laid off 4,000 staff.
However, with about 80% of New Zealand’s cargo shipments typically going to bellyholds, the nearly overnight switch to dedicated cargo flights has provided the airline a “green shot”, with cargo revenue jumping from 10% business to 50%.
Alexander Larsen, global sales manager, said the airline started a 48-hour charter service after being forced to cut its weekly flight schedule for 166 wide-bodied passengers to just 12.
“We reimburse our business model for operating passenger planes as cargo only,” he said The Loadstar. The scale and rate of change is extraordinary.
The airline started charter flights on March 30, between Auckland and Shanghai, providing a rescue route for exporters and bringing back essential PPE. Charter is extended to Hong Kong, Taipei, Australia and North America, flying 256 rotations until mid-June.
During that time, the government introduced the International Airfreight Capacity Scheme (IACS), which subsidizes cargo flights by an amount of NZ $ 330 million (US $ 216 million), to ensure international supply chains remain open as freight rates swell out of control for many shippers.
“That means we can move away from cargo alone for this charter model to scheduling services again, which provides safety and reliability in our ability to plan for advanced services, ”explained Mr Larsen.
Air New Zealand currently operates 52 of 70 IACS services in the country, including to Melbourne, Brisbane, Shanghai, Hong Kong, Narita, Los Angeles, San Francisco and the Pacific islands.
And when Australia launched its own subsidy scheme, Air New Zealand joins, serving the Brisbane to Los Angeles trade.
Mr Larsen said the subsidies allowed airlines to lower fares to somewhere between pre-Covid levels, allowing access to special cargo charters.
Some passengers now use scheduled flights, mostly for repatriation, but even on cargo only charters, Air New Zealand prefers not to load cargo on the maindeck.
“We decided at that point there was no point in pursuing,” said Mr Larsen. “New Zealand’s exporters profile is mostly solid perishable material, so you don’t actually get a significant weight gain. By removing the seats you obviously get a volume advantage, but we can still carry 40-45 tons of cargo on the long 789 journeys to Los Angeles or Shanghai. “
Exports include cold meat, fish and live lobster to North America and Asia, Larsen said, while imports include auto parts from Japan and electronics and apparel from China and Hong Kong, as well as an increase in the volume of electronic commerce.
“We’ve seen a volume boom coming through the mail channel in recent weeks,” he said, noting that e-com cargoes and high-tech goods fared “more tolerant” of rising freight rates across the market than some of the perishable exports.
In addition, as the main export season for fresh produce such as capsicum, tomatoes and cherries starts next month, a race is on to ensure sufficient capacity is available.
Mr Larsen estimated there was still only 35% -40% of pre-crisis air shipping capacity in New Zealand, with a sharp rise in tariffs pushing most of the produce to container ships.
However, he is optimistic in the medium term that, as borders reopen and passengers fly again, the speed of air delivery to market advantage will outweigh the higher marginal costs of shipping air over the ocean.
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