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CFS 2022: Freighter operators confident in recovery despite short-term concerns

This story was originally published in Cargo Facts on Oct. 21, 2022

Freighter operators remain confident in the overall long-term strength of the industry despite short-term headwinds, citing changes in industry patterns and customer behavior.

Speaking during the opening session at Cargo Facts Symposium 2022 in San Diego, Michael Steen, chief commercial officer of Atlas Air, said that the market can expect a short-run downturn with a quick recovery.

LATAM Cargo Chief Executive Officer Andres Bianchi, Mas Chief Executive Officer Luis Sierra and Atlas Air Executive Vice President and Chief Commercial Officer Michael Steen.

LATAM Cargo Chief Executive Officer Andres Bianchi, Mas Chief Executive Officer Luis Sierra and Atlas Air Executive Vice President and Chief Commercial Officer Michael Steen. (Photo/Cargo Facts)

“The outlook is still looking positive, even though we are going to have a challenging 2023,” Steen said. “If you look at where our industry is today, and after us dealing with all these black swan events, yields are still significantly higher on an industry basis than 2019 and, I would argue, on par with 2018, which was a record year for the industry.”

For Mexico-based Mas, the biggest question mark revolves around how China will behave, along with potential trade confusion and conflict. “I think that will really only change the rest of the markets,” Mas CEO Luis Sierra said. “Many of the recession signs are already here and many countries are already suffering the first stages of recession,” he added. “But one thing of which I am certain is that every time that we see a recovery of those markets in comparison with the last crisis we have more like a V-shaped recovery instead of a U. So I think we’re going to see the worst of it in the first semester next year.”

Atlas, Mas and LATAM Cargo noted that structural changes in the industry have created an environment beneficial to the air freight sector. One example is perishables and flowers, for which demand was mostly North-South.

“The pandemic created demand from countries in South America,” Steen said. “Nowadays, there are daily connections out of China to Brazil and Chile, which then created an opportunity for the Latin American perishable market to sell directly into China in a way that they weren’t able to do in the past.”

Perishables represent a significant opportunity for Mas, Sierra said. “I have a lot of faith in perishables. The flower industry in Africa going into Europe is something that they are estimating two-digit growth for in the next few years,” he noted.

E-commerce demand does not appear to be a trend that will revert, Sierra predicted, adding that it is currently growing at double digits in most countries.

Andres Bianchi, CEO of LATAM Cargo, noted changes in freight forwarder buying patterns, which could change how the industry operates.

“We used to be a sell-by-the-kilo type of airline, but we are changing,” he said.

The executives cited the cyclical nature of the air cargo market to justify continued confidence in their respective fleet expansions.

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