Atlas reports strong shipper interest from China into 2Q

As manufacturing begins to ramp up again in China after the extended Lunar New Year holiday, shippers and forwarders are looking to airfreight as a stable mode of transportation into March, April and May, Atlas Air Worldwide President and CEO John Dietrich said during the company’s fourth-quarter earnings call today.

With little belly space available in passenger flights from China in the wake of mass cancellations, and operations at China’s ports likewise virtually halted in an effort to stop the spread of the coronavirus, shippers are increasingly turning to airfreight to move goods out of China. Also, the duration of current virus-containment efforts is uncertain, leading shippers and forwarders to seek capacity on freighter aircraft months ahead of time.

In response to an analyst question during today’s call, Dietrich confirmed that shippers, forwarders and brokers have been in contact with Atlas for space reservations well into the second quarter.

“Absolutely, we’re getting a lot of calls from some very experienced and knowledgeable shippers, freight forwarders and brokers,” Dietrich said. “None of us knows for sure what is going to happen, and there’s a lot of uncertainty, but what we do know is with the support of senior officials in government who are committed to keeping goods moving and the supply chain moving, [manufacturing] is going to return.”

Despite the cancellation of most passenger service to and from China, freighter aircraft have continued operating, either as scheduled or charter service.

“We are also currently accommodating special charter demand, and we are well prepared for the anticipated surge of volumes once manufacturing resumes in full force,” Dietrich said during the company’s prepared remarks.

Although rates from China have increased significantly following the Lunar New Year, manufacturing has yet to return to normal levels. Softer airfreight demand from 2019 has continued into 2020, leading Atlas to park four 747-400BCFs so far this year to reduce its capacity.