Cathay Pacific says market demand is picking up gradually after the Chinese New Year, with the carrier saying it will continue to monitor the developments.
The Hong Kong carrier had a record-breaking year in 2018 and in February, recently announcing an expected HK$2.3 billion (USD 293 million) profit, a positive result that reflects the record year for the cargo division.
The cargo market has had a softer start to 2019 in comparison to last January, according to Frank Yau, head of Cargo Sales, Hong Kong, with the Cathay Cargo carrying 166,735 tonnes of cargo and mail in January, a decrease of 3.4 per cent on 2018 figures.
“By working closely with our business partners and being more responsive to the market, we expect our business will be back on the growth trend again,” says Yau, head of Cargo Sales, Hong Kong, commenting in the carrier’s customer newsletter.
“We are of course keeping an eye on developments in international trade and resolutions to the Brexit issue, but our key focus remains on our three key differentiators – expertise, quality and innovation. Although the market is less certain in the short run, we remain confident in the medium and long term,” he adds.
From 1 March, Cathay will introduce a new structure for the cargo sales team that aims to be more customer-centric, agile, and resilient, Yau says.
Earlier the carrier summed up 2018 by saying: “It was a pretty good year.”
But it adds that there are two caveats to this: Growth was unexceptional, given the high demand in 2017; and escalating trade tensions have led to uncertainty, although it has not yet dampened the air freight market.”
The peak of 2017 triggered both forwarders and airlines to look more closely at the amount of capacity they controlled. While airlines were keen to enjoy potential spikes in spot rates by keeping capacity back, the policy had mixed results, Cathay says.
Demand out of Asia was strong and justified forwarders booking space in advance, but the market was weaker in Europe – last-minute spot rates did not fulfil the high expectations carriers were hoping for, the carrier notes.
Nevertheless, Cathay highlights that both buyers and sellers said that a rough 50:50 split between booked capacity and ad hoc had worked well – and both are talking of a similar amount in 2019.
“However, industry sentiment suggests next year could be weaker. Supply chains may be unpredictable, although shifts in trade tend to play well for air cargo, initially at least,” the carrier adds.
“A darker cloud is the global economy. The International Monetary Fund and others have issued stark warnings and many predict a global recession in 2020, with its roots forming in 2019.”