Air Cargo Approaching a crisis?


Who in their right mind would run a cargo airline?  Just take a look at some of the headlines surrounding the worlds air cargo carriers.

  • Cathay Pacific saw air cargo volume drop 11.4% before the crisis in Hong Kong – and into which it has been dragged as the Chinese Government bullies it over staff who might have been involved in protests. It’s year on year figures were slipping by 3% – that’s more than it’s profit margin, so imagine how bad it will be in Q3.
  • The giant Russian Volga-Dnepr Group is is serious trouble, with management excoriated, and a company reorganisation in full swing. Its figures dropped 6%, a 20% bigger drop than it had estimated to investors.
  • Air Canada Cargo saw it’s Asian operations drop precipitously – 20%
  • International Airlines Group which reports its whole BA World Cargo/AerLingus/Vueling/Iberia figures as one, saw revenue drop 3.2%. again that’s more than most of the profit margins.


The overall view seems to be that it could be worse. Declines in Q2 were not as bad as Q1, but there is suspicion the US tariffs on Chinese goods will severely impact US air freight. Atlas Global at least won its court case against the pilots, which would possibly see peace break out. I wouldn’t bet on it. Disgruntled pilots will go elsewhere, they’re in big demand.

My understanding is that where cargo pricing and profitability has improved, it’s been down to a reduction in capacity – so while someone is doing just about OK, someone has moved out of the market.

The fear is that the Trump-China tariff wars will heavily impact US consumer prices at peak season, or reduce profits of companies who absorb them.

German air freight is seriously bad however as the country is teetering on the brink of a recession – it’s down 22.5%, Europe as a whole is down -14.8%%.

Air freight is becoming even more competitive, survival is a struggle. And in Germany, the biggest looser could well be Lufthansa’s MD-11F fleet, already under close scrutiny.