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Major airlines post improved earnings on back of strong Asia air freight volumes

THE switch from ocean to air freight by shippers has driven up earnings for major Asian air cargo carriers, according to a Reuters report.

Given the region's 40 per cent stake in the global market on account of Asia being a manufacturing hub, carriers like Cathay Pacific Airways and Korean Air Lines generate a quarter of their revenues from freight.

According to Reuters, air carriers are benefitting from downturns in semiconductors and auto parts inventories, leading customers and manufacturers to utilise air freight rather than ocean shipping for replenishment thanks to its faster transit times.

As a result, global air cargo volumes grew 10.4 per cent in the first six months of the year, marking the strongest half-year performance in seven years, according to data from the International Air Transport Association (IATA), reported American Shipper.

Cathay Pacific Airways recorded a 12 per cent rise in first-half cargo revenue, while Singapore Airlines, which posted a US$6 million profit in the first quarter compared to a $34 million loss the previous year, said that customers are securing capacity for the year-end peak season in anticipation of major product launches, according to Reuters.

"Cargo, far from being a drag, is now back as a profit contributor, even for freighters," director general at the Association of Asia Pacific Airlines, Andrew Herdman, told Reuters.

"The boom in restocking goods like auto parts and chips via air freight is expected to end some time around the end of the year," said IATA chief economist Brian Pearce.

"But growth in e-commerce and a shift by pharmaceutical companies to air for safer cold transportation of drugs is expected to continue to support demand. I would think that we would see strong growth still in the second half of this year with a return to more normal [growth] levels perhaps next year."