NATO’s bombardment of Libyan government facilities in an effort to drive Col. Muammar Qaddafi from power continues.
Libya is a small country and the loss of trade opportunities due to hostilities is having minimal impact on the global economy, although individual companies in Europe and elsewhere are certainly suffering from the loss of business.
But the conflict indirectly impacts international trade because Libyan oil production has been sharply curtailed. The loss of 1.3 million barrels of oil per day has a large effect on the aviation industry, which is responsible for moving billions of dollars of goods each year, because Libyan crude oil is low in sulfur content and close to European refiners — making it desirable to make jet fuel, according to Aviation Week & Space Technology.
Oil with higher sulfur content requires additional refining steps.
Kenya Airways focuses on freight
Kenya Airways plans to acquire its first freighter this year to take advantage of the growing air cargo market in Africa.
For the fiscal year ended March 31, the African carrier reported cargo tonnage increased 2.2 percent with a yield growth of 13.7 percent. The carrier’s best cargo business involved Europe, southern Africa, East Africa and domestic routes. Cargo shipments dropped off for the Middle East, North Africa and the Far East. The political unrest in places such as Tunisia, Libya, Syria, Yemen, Bahrain and Egypt reduced trade in the region and impacted the air cargo industry. The airline said the decline was exacerbated by excess baggage that took up space normally devoted to cargo shipments.
In the fourth quarter, cargo tonnage increased 5.2 percent to 14,326 tons versus the same period a year earlier. The upturn was attributed to more dense cargo shipments and improved weather that led to increased harvests of agricultural products.
The airline has also invested in cold storage warehouses to handle growth in flower exports. Flowers accounted for 41 percent of Kenya’s total exports in 2010. Europe receives 68 percent of Kenya’s exports. Perishable products such as fresh fruit and vegetables are Kenya’s other major export contributors.
Kenya’s main airport in Nairobi is the exception in Africa because it handles more exports than imports.
The new freighter, which according to Cargo Network Services’ spring edition, is a 737-300 with 19 tons of capacity, will be dedicated to intra-Africa routes and also serve interline partners on the continent.
Kenya Airways’ cargo division became an independent division in 2004. The company said it hopes to expand its freighter fleet in the future if there is strong customer demand for service.
Kenya Airways officials say prospects for the air cargo industry in Africa are buoyed by economic growth in the region, investments in infrastructure and increased purchasing power of Africans that will lead to more consumption.
DHL pushes Asia-Pacific investments
Integrated logistics provider DHL recently announced further investments in its Asia-Pacific network, with three new Boeing 747-400 converted freighters at a cost of 100 million euros ($145.3 million), and the opening of a new office in Indonesia.
The new aircraft are operated by Air Hong Kong, the joint venture between DHL and Cathay Pacific. They will serve high-capacity routes between Hong Kong and Tokyo, Singapore and Shanghai six days a week.
The 747-400 has a payload of 100 tons. Air Hong Kong has operated two A300-600 freighters on the Hong Kong/Tokyo and Hong Kong/Shanghai route. By September, those two planes will be redeployed to the Beijing/Hong Kong and Manila/Hong Kong routes five times per week, replacing two 24-ton Boeing 727-200F planes that will be retired.
DHL has also enhanced its air network by adding a daily, overnight route from Hong Kong to its Cincinnati hub to meet increased demand. The new service allows customers a later pick up time from factories in Hong Kong and the Pearl River Delta.
Plans are on track for DHL to open its $175 million North Asia hub at Shanghai Pudong Airport in early 2012.
The global logistics manager and express carrier also strongly endorsed a proposal to add a third runway at Hong Kong International Airport (HKIA) to keep up with cargo growth from China.
Hong Kong is DHL Express’ hub for Central Asia.
Last year, Hong Kong International overtook Memphis, Tenn., where FedEx has its U.S. hub, as the world’s largest cargo airport with a 23 percent increase in volumes to 4.17 million tons. The International Air Transport Association forecasts that by 2014 Hong Kong passenger traffic will grow 6.7 percent per year from 45 million passengers in 2009 to 62.2 million, and that air freight will grow to 5.3 million tons.
By 2030, the airport’s cargo volume is forecast to nearly double to 8.9 million tons, according to the airport authority. In addition to supporting China’s export economy, Hong Kong is expected to experience a significant increase in imports as Chinese consumers seek more goods from around the world, DHL officials said.
“While Hong Kong currently outperforms its population size on the world stage because of its connectivity, this could change if infrastructure fails to keep pace with growth. For example, if HKIA is unable to open new destinations, expand flight frequencies or maintain schedules during bad weather or emergencies because it does not have enough runways, Hong Kong will suffer economically as logistics providers and companies will have to reroute or rethink their supply chains,” said Kelvin Leung, chief executive officer of DHL Global Forwarding for North Asia Pacific, in a statement.
Built in 1992 to handle 87 million passengers and 9 million tons of cargo, HKIA is estimated to be operating at 93 percent capacity, and will reach saturation by 2017. The Hong Kong airport authority has said the two runways will run out of capacity by 2020.
Cargo Airline Association rotates chairman
The Cargo Airline Association has named Adam R. Kokas, general counsel and chief human resources officer at Atlas Air Worldwide Holdings, as its new chairman.
Kokas succeeds Robert Gray, vice president of flight operations at ABX Air, who has held the position for five years and will remain on the board.
The Cargo Airline Association is an advocate for the air cargo industry. Its members include all-cargo carriers such as UPS and FedEx, as well as airports.