Cathay Pacific’s November cargo traffic shrinks on weak China exports

Holidays deliver less cheer as inflation, COVID restrictions suppress shipments

A Cathay Pacific Cargo 747-8 freighter takes off from its home base at Hong Kong International Airport, July 27, 2020. (Photo: Shutterstock/LPatricK297)

A Cathay Pacific Cargo 747-8 freighter takes off from its home base at Hong Kong International Airport, July 27, 2020. (Photo: Shutterstock/LPatricK297)

Hong Kong-based Cathay Pacific saw cargo volumes significantly contract in November, reflecting the degree to which the normal peak shipping season in Asia has failed to materialize this year and the airline’s struggle to overcome strict COVID-19 restrictions in Hong Kong and China.

The ninth-largest cargo carrier by volume reported Tuesday that demand fell 6% from October. The slowdown resembles what is happening in the broader market, especially for East Asia to the U.S. and Europe. The decline in air cargo volume out of China, for example, accelerated in October, with shipments down 21% from the prior year compared to negative 12% for the first 10 months of the year, according to market intelligence firm Xeneta.

Cargo carried on Cathay freighter and passenger aircraft fell nearly a quarter (23.8%) to 114,000 tons and was 42% below pre-pandemic levels. Measured by distance carried, which serves as the basis for revenue, volume declined 28% from the prior year. The slowdown in shipping combined with flight limitations contributed to a 15.6-point drop in load factors, resulting in cargo holds being two-thirds full. 

For the January-November period, Cathay Pacific’s cargo volume in tons was 12.6% below the same period in 2021. 


Chief Commercial Officer Ronald Lam partly attributed the weak results to reduced productivity of Chinese factories because of government crackdowns on mobility to stamp out COVID outbreaks in many cities. Inflation in the U.S. and Europe has also dampened consumer purchases of goods. 

The carrier experienced “a mild uptick” in e-commerce shipments to North America around the Black Friday shopping event, but there was no similar increase on intra-Asia trade corridors.

A bright spot for Cathay Pacific Cargo, with 20 Boeing 747 freighters in the fleet, has been perishable goods from South America as well as Australia and New Zealand. The carrier operated five special flights from Darwin, Australia, to bring seasonal produce to North Asia.

Cathay Pacific’s prospects are much brighter for 2023 following the loosening of Hong Kong’s travel restrictions, which has enabled the carrier to reintroduce more passenger flights. On Tuesday, Hong Kong authorities removed remaining quarantine requirements for travelers arriving in the semi-autonomous city. Chinese officials have also begun to relax lockdown orders, adding to optimism that factory output will soon increase.


The trickle of passengers over the past 2.5 years has turned into a modest stream since the fall but was still 80% below 2019 levels in November. Cathay Pacific Group, which includes Hong Kong Express, has added about 3,000 passenger flight sectors in the fourth quarter and expects to be operating at about 70% of pre-pandemic passenger capacity by the end of 2023. 

“Our expanding passenger travel network will provide our cargo customers with more destinations and greater frequencies to choose from as well,” Lam said. “However, we expect headwinds in the air cargo market to continue in the short term until supply chains in the Chinese mainland become more stable and inventory levels in key consumer markets reduce.” 

Slow East Asia market

Cathay Pacific has been forced to deal with unique circumstances, but its cargo experience with lower demand serves as a microcosm of the air cargo market in Asia. Cargo volumes from East Asia to the U.S. are down 9% through October versus last year’s historic results, according to U.S. Census Bureau data. 

Volume declines out of China to the U.S. are more pronounced than from Hong Kong, Taiwan, Japan and South Korea. Cargo traffic for the rest of East Asia slid from negative 4% in the second quarter to minus 8% in October versus 2021, according to Xeneta’s analysis. And volumes for East Asian air exports, not including China, are actually up 39% from 2019.

Air cargo rates have also steadily lost altitude since March. The price to book cargo space for immediate delivery between East Asia and the U.S. was $5.68 per kilogram as of Friday, a 46% drop from the peak of $10.52 in late December 2021, Xeneta reported Wednesday

Spot rates on this trade lane are now at a two-year low but still double those for the same period in 2019. A key factor propping up rates is the slow reopening of travel in Asian nations, which has limited the supply of cheaper capacity on passenger aircraft.

On the East Asia-to-Europe lane, spot rates are down 36% since the start of the year but are twice as high as three years ago.

More FreightWaves/American Shipper stories by Eric Kulisch.


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