Steady demand lifts air cargo firms

Airfreight is expected to see a further boost next year thanks to an expected surge in the transport of medical supplies and booming cross-border e-commerce, industry executives said.

Cold chain air transport of COVID-19 vaccines is likely to peak from the second quarter of next year, when drugmakers will have readied their products based on current demand, said Mi Dongmei, China chief representative of Lufthansa Cargo AG.

"Medical supplies transportation has put rather stringent requirements on timeliness and temperature control," Mi said during a news briefing in Shanghai. "Airlines would need to obtain the CEIVPharma certificate to qualify to transport COVID vaccines."

A joint venture of Lufthansa at Shanghai Pudong International Airport is among the four biggest pharma hubs worldwide that are capable of handling medicine transport under various temperature requirements of between 8 C and -20 C.

"Apart from Asia, we are poised to cover Africa and South America leveraging our extensive flight networks. These are the regions where we anticipate COVID vaccines are most needed for transnational transport," she said.

To meet the growing demand for cargo capacity, Lufthansa is turning passenger aircraft into freighters, filling their belly space with goods to fly across the globe. Besides operating 20 weekly all-cargo freighter flights, a total of five flights per week are being conducted in China with passenger plane-turned freighters.

While opportunities abound, challenges lie in the limited capacity expansion in the short term to meet the sudden pickup in demand, said Christopher Pollard, CEO of DB Schenker China, a logistics firm.

He said critical markets served by passenger flight belly capacity before the COVID-19 epidemic will remain challenging with no signs of improvement within the short term due to the current uncertainties related to global passenger demand.

"Looking forward to the next year, conversion of passenger planes into freighter is the only option to deploy capacity. But you cannot expand the capacity overnight. Also, vaccines could take up a lot of volume. This means occupying space for other cargo, like electronic goods," he said.

According to Lufthansa's Mi, even if the passenger flights are converted to cargo aircraft, they would not be able to carry special goods like vaccines in full capacity due to the special storage requirements. Also, the cost of converted freighters is three times that of conventional ones.

In addition to pharmaceuticals, Pollard also expects high-tech, e-commerce and consumer retail sectors to push up cargo demand in 2021.

Mi said cross-border e-commerce exports currently account for 20 percent of all cargo business for Lufthansa in China.

"This is impressive given that the goods ultimately go to individual consumers, with Amsterdam, Paris and London being the top three hubs for such products," she said.