Freight rates are set to rise amid concerns about the omicron, new quarantine restrictions and a ban on passenger aircraft in China.
As an aviation expert with vast experience in the air cargo industry, I believe this year will be a good year for most air cargo carriers. Airlines specializing exclusively in the carriage of goods, including ZetAvia, can confidently rely on a positive scenario. The optimistic outlook for cargo aviation is based on a number of critical events during the pandemic, facts and trends affecting the aviation industry.
This year, air cargo tariffs are under much stronger pressure than before. First of all, the negative impact of quarantine restrictions and measures that are constantly being introduced by various countries affects. So, for example, strict quarantine in Hong Kong due to the spread of the omicron strain in the world. The current restrictions in Hong Kong include isolation for crews even if they test negative for COVID-19, limiting social contact for two and a half weeks, and taking a PCR test daily during this time. The harsh measures have made it difficult for many airlines, which have already begun to give up flights to Hong Kong. Congestion and labor shortages for ground services, growing demands for vaccine distribution and the ever-changing COVID-19 regulatory framework will also continue to drive up rates across the board.
A further increase in tariffs will also lead to the ban on the carriage of goods by passenger aircraft introduced in China since the new year. An exception was made only for funds intended to combat the pandemic. In all other cases, China will no longer accept cargo shipped on passenger aircraft. At the same time, over the past few weeks, there has been an unprecedented increase in the need for cargo transportation for the pandemic, for which there is now a huge demand in Europe. The conclusion is obvious - the new Chinese rules will lead to an even greater reduction in the supply of air cargo on the market, exacerbating this problem with high fuel prices, which will inevitably lead to an increase in rates.
The International Air Transport Association (IATA) sees an opportunity to solve the capacity crisis in the gradual replacement of their fleets by airlines. In particular, in the purchase of cargo aircraft, including electric ones. However, such examples are still rare. The industry leaders have signed new contracts for the purchase of cargo planes quite recently, and plans to purchase all-electric cargo planes exist so far only on paper. Therefore, at present, IATA is pinning its hopes on digitalization and modernization of processes, which in the future may partially reduce tariffs for air cargo transportation.
Note that the European Aviation Safety Agency (EASA) and the US Federal Aviation Regulatory Agency (FAA) have extended their consent to the carriage of goods in passenger aircraft cabins until July 2022. This will allow airlines outside of China to carry cargo on passenger aircraft on routes that bypass China for another six months.