Cathay Pacific looks to increase higher-value cargo
Feb-28-2013 By : agxadmin
Cathay Pacific Airways aims to replicate its business-class strategy in a cargo trade upgrade. It wants to fly more diamonds and medicines rather than T-shirts. Nick Rhodes, the airline’s Cargo Director, said: “Similar to the passenger service, we are not a low-cost carrier. We try to be a full-service cargo carrier. That’s really our DNA.” The airline, the world’s biggest international air-cargo carrier, started operating its first independently-owned goods terminal in Hong Kong this month, increasing the airport’s capacity by half. The airline has spent HKD5.9 billion on a facility it says will help Cathay target an increase of up to 20% in more profitable shipments of high-value goods, perishables and vaccines. Success with that strategy is critical to boosting profit in a business that accounts for over a fifth of the airline’s revenue. Both Singapore and Korean Air Lines also want to move to higher-value goods even as the global air-freight market declined for a second straight year in 2012, amid a slump in demand across Europe. Cathay, which moves cargo with 22 dedicated aircraft and in the bellies of passenger aircraft, carried 1.56 million tons of cargo and mail last year, 5.3% less than a year earlier. Revenue, measured by weight multiplied by kilometers, also fell 7.3% to CNY8.94 million.
Older Boeing 747s no longer cost efficient
By : agxadmin
Air cargo and passenger airlines using older fuel-guzzling long-range freighters could pull out of the air cargo market this year as they battle falling yields and persistently high fuel costs, according to industry observers. They said this could remove capacity and help balance supply and demand growth, which would support yields for major airlines in the air freight market. Nick Rhodes, Cathay Pacific Cargo Director, said carriers operating older Boeing 747s on long-haul routes will find it extremely difficult to make a positive return in the current climate, even if the aircraft are fully depreciated. Rhodes said Cathay Pacific had already scrapped one of its six 747-400s that was converted from a passenger to a freighter aircraft. Four cargo aircraft have been parked as the airline reduces freighter capacity and prepares for the arrival of more Boeing 747-8 freighters and the launch of its 777-200 freighter services. Air China Cargo, Cathay’s joint venture with Air China, is rumored to be the recipient of some of the 777 freighters to replace 747-400 converted freighters as it seeks to stem losses. The International Air Transport Association (IATA) estimated that fuel accounted for 33% of an airline’s operating expenses last year compared with just 14% in 2003.
Memphis closes in on Hong Kong in air cargo
By : agxadmin
Growth of shipments at FedEx’s home hub in Memphis, Tennessee, topped Hong Kong’s for the first time since the U.S. facility lost the title of world’s busiest cargo airport in 2010. Volume rose 2.5% in Memphis, outpacing Hong Kong’s 2.3%, Bloomberg data show. That helped shrink Hong Kong’s lead in tonnage to 0.2% from 5.3% in 2010. Kevin Sterling, Analyst at BB&T, said: “Memphis has kind of held steady versus Hong Kong, which has been on more of a roller-coaster ride.” The International Air Transport Association (IATA) forecast that air cargo demand worldwide would increase 1.4% this year, resuming growth after declines of 1.5% last year and 0.6% in 2011. The U.S. will be the top cargo market in 2016, with 7.7 million tons of international freight that year, against 3.49 million for mainland China and 3.23 million for Hong Kong, it predicted. Hong Kong faced more challenges, grappling with slower mainland Chinese expansion, declining shipments to Europe and fiercer competition from other airports, Wells Fargo Senior Economist Mark Vitner said. Lower European volumes would probably remain a challenge in the next four years, the IATA predicted. Shipments between the Asia-Pacific region and Europe would drop to 17% of global freight traffic by 2016 from about 18% in 2011. At the same time, Hong Kong’s regional competitors are vying for larger market share. Terminals in China, such as Shenzhen Baoan International Airport and Guangzhou Baiyun International Airport, where FedEx opened a hub in 2009, were getting more traffic because of infrastructure improvements, said Chris McNally, Political Economist at the East-West Center.
PE interest in Quanfeng could lead to IPO
By : agxadmin
Quanfeng Express, a Chinese courier that started operations in July 2011, has attracted investment interest from private equity companies. The funding is likely to pave the way for the first initial public offering (IPO) in the industry, analysts say. Leading Capital Fortune, Beijing Pengkang Investment Co and Phoenix Capital Asset Management have announced they will inject CNY200 million into the courier to bolster its nationwide expansion, said the company’s President Chen Jiahai. Quanfeng’s existing shareholders maintain the controlling right in the company, and investors will only intervene in financial issues, not in daily operations, company Spokesman Dai Changzheng said. The company aims to turn itself into a mid-to-high-end express delivery firm, following in the footsteps of SF Express (Group) Co, which charges double for same-city deliveries compared with local rivals, Dai said. Aided by the funding, the company also plans to seek a listing in three to five years, according to Dai. He added that Quanfeng targets small parcels weighing less than 5 kg, and focuses on cross-town businesses in first-tier cities such as Beijing, Shanghai and Guangzhou. Greater supervision of the industry has been called for after postal authorities canceled the licenses of 116 couriers in the past year for allegedly losing mail and poor sorting. “We want to guarantee customers speed, safety and quality of services, so that they are willing to pay more for our services,” Dai said. China’s express delivery sector was worth CNY48.9 billion in the first half of 2012, according to China Express and Logistics Consulting. Compared with interregional and international businesses, cross-town delivery enjoyed the fastest year-on-year growth of 54.5% in the first quarter of 2012, with revenue reaching CNY2.02 billion, according to China Venture Group, as reported by the China Daily.
Delivery companies start recruiting, offer higher salaries
By : agxadmin
Many parcel delivery companies are offering higher salaries and other incentives to lure workers returning from the Chinese New Year holiday. Many companies started recruiting more heavily, with some offering salaries up to CNY8,000 or extra subsidies. The average salary offered by delivery firms has been about CNY5,000, industry insiders said. Some salary offers are even pulling workers from other industries and regions. “Many local deliverymen are temporary workers and have no long-term contracts with the firms, so it is always difficult for the firms to call them back after holidays,” said Chen Guoqiang, Manager with YTO Express in Shanghai. While salaries may go up, workers may be working harder. Many online orders for holiday gifts, which boomed this year, have been waiting in warehouses because of the labor shortage. “The workload has been nearly doubled,” said He Rubin, a courier with TTK Express. Workers said some of those who didn’t go home for the holidays stopped working because of the heavy workload. The work was also more difficult because people weren’t at home to take deliveries during the holiday.
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