News
- CIFFA News
- 10/8/2009
- Air France-KLM Cutting Freighter Capacity 40 Percent
Excerpted from JOC Online - Air France-KLM will cut cargo capacity 40 percent this winter compared to last year after watching a slump in demand this year extend into September. Although the rate of decline has slowed in the past four months, cargo traffic for Air France-KLM fell 17.2 percent in September from a year ago. Traffic on the Americas network fell 10.4 percent with a 10.9 percent reduction in capacity while Asia/Pacific volume contracted 24.4 percent as the carrier slashed freight space on the network by 33.4 percent. Air France-KLM, including its Amsterdam-based all-cargo and charter airline Martinair, will be marketing 20 percent less freight capacity than a year ago in the winter season beginning Oct. 25 to match the slide in demand. It also plans to operate around 40 percent less full freighter capacity through the winter compared with a year ago. Among the cuts, KLM Cargo will end a twice-weekly Amsterdam-Shanghai service. Air France-KLM is said to be seeking a 20-30 percent increase in freight rates in the winter season in a bid to boost revenue and return its freight unit to profit.
Ocean Updates
• Wake Up Call - Low Rates Unsustainable
The entire shipping industry must be prepared for significant rate increase action as carriers struggle to survive, especially in the hard hit Pacific trade lanes. Following a dramatic downturn in cargo volumes in 2008, ocean freight rates have nose-dived, triggering huge financial losses among the carriers. No-one could reasonably expect these low freight rates to continue. Already carriers are parking vessels, reducing service and consolidating in efforts to stem the bleed. If North American importers and exporters hope to have direct, frequent capacity on the Pacific trade lanes, rates must be restored to compensatory levels.
In an announcement Tuesday, the Transpacific Stabilization Agreement (TSA) issued new voluntary guidelines that called for an additional an additional $1,000 per FEU for intermodal shipments to interior U.S. destinations and on all-water services from Asia to the East Coast. The guidelines also call for lines to institute general rate increases of $800 per FEU for Asia to U.S. West Coast shipments. The TSA announcement also suggests a peak season surcharge of $400 per FEU to come into effect August 1, 2010 “to address higher cargo handling, equipment positioning and contingency planning costs during periods of peak cargo volume.” Lastly, the guidelines call for “full collection of fuel and other accessorial charges.”
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