Nippon Cargo Airlines’ (NCA) fleet of eleven 747Fs has now been grounded for more than a week as government authorities continue to audit the carrier’s maintenance records. With the sudden loss of capacity ex-Asia, forwarders and shippers active in the market are starting to feel the capacity squeeze, particularly as it translates into higher rates.
A regional executive at the Shanghai branch office of a major forwarder told Air Cargo World that forwarders possessing capacity arrangements with multiple carriers were less-impacted than others. Still, with three scheduled trans-Pacific flights no longer calling to Shanghai Pudong International Airport (PVG), the overall impact on a market like Shanghai is quite significant, particularly as demand remains robust.
The grounding of NCA’s fleet comes at a time when some U.S.-based shippers are reportedly rushing to fortify inventories of Chinese goods ahead of new duties scheduled to be waged as part of the Trump Administration’s trade war with China. As capacity tightens, rates are starting to rise accordingly. On some routes ex-Shanghai, rates have already jumped by US$0.80 to $1 per kilogram, and there are signs that further increases are coming.
Not all were taken by surprise with NCA’s decision to ground its fleet, some forwarders saw the writing on the wall well in advance. Chris Connell vice president of perishables North America, Commodity Forwarders, told Air Cargo World, “Their issue was building up to this point.” As a result, Commodity forwarders had already decreased its reliance on NCA.
Regarding capacity between North America and Asia, Connel said, “there is plenty” of space on passenger aircraft for more perishable items and smaller consignments. When it comes to oversized or larger shipments, however, belly space is not a suitable option due to size constraints, and forwarders must find full-freighters to move the goods.
Despite the nuisance, Connel added that the timing could certainly have been worse. “This time of year is less of an issue versus the end or start of a year.” Connel added, “At the end of the day, if this pause helps NCA find its feet, this does have a middle term positive.”
In NCA’s last statement, it said that it would be “at least more than another week” before the industry could expect its fleet to return to its current schedule, meaning it’s safe to assume that operations won’t restart until early July.3 - Readers Like This Post