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Low cargo load gives airlines the fright

Nina Varghese

WITH cargo volumes falling dramatically over the past few weeks, airlines have dropped freight rates. Freighters are flying out with less than 50 per cent load factor. The drop in cargo volumes has caught the airlines off guard. The air cargo industry is in a panic as the reasons for the downturn are not clear.

According to airline sources, there was cargo in the market right up to the middle of April, but dried up after that. Almost all the air cargo out of India on the European and US sectors are leather products and readymade garments with the US being the p rimary market.

One reason is perhaps the drop in orders for readymade garments this year. According to garment industry sources, there are no further orders from American buyers. Most of the air shipments till now are of spring and summer wear.

The January-April figures from the Apparel Export Promotion Council from are alarming. Exports of readymade garments to the US were down by 14.7 per cent in value and 13.3 per cent in quantity. Garment industry sources said this was the first time in dec ades that the US market had shown a negative figure in the first three months of the year.

Exports to Europe are also down by 2.9 per cent in quantity and 9.8 per cent in value. Exports to Canada, another important market for garments, are down by 30.9 per cent in quantity and 22.8 per cent in value.

The despatch figures for April are around 4,901.81 tonnes against the 4,854 tonnes for the corresponding previous period. Airline sources said that the carriers started feeling the pinch after May, and many have cancelled their freighters.

Five European carriers -- Cargolux, Alitalia, Swissair, Air France, Lufthansa- operate a total of 13 freighters out of Chennai with a total capacity of 596 tonnes per week. British Airways operates an ad hoc freighter which adds another 40 tones when it operates. The passenger flights of Sabena, British Airways and Lufthansa out of Chennai carry around 80 tonnes per week.

The Gulf carriers also pick cargo for onward destinations in the US and Europe and offer around 200 tonnes. Singapore Airlines carries cargo to the US via its hub and operates seven line flights with capacity of around 98 tonnes and two freighters of 50 tonnes each. Malaysia Airlines System operates seven flights and has around 84 tonnes belly capacity.

Airlines are quoting rates as low as Rs 40 a kg out of Mumbai, according to one airline source. Freight forwarders say that branch offices of the same airline are competing with one another to grab the available cargo to meet their targets. Cargo from Ch ennai and Tirupur, the hosiery centre in Tamil Nadu, is being trucked to Mumbai to get better rates there.

This time last year, rates to Europe were Rs 90-99 a kg for the plus-500 kg segment and Rs 100 for the same break weight. One airline source said that last year, the market was flush with cargo and they did not have enough capacity to handle it. Huge con signments of garments were stuck at the major airports, with the airlines charging express rates to airlift cargo. It may be recalled that garment manufacturers made special representations to the Government to ask the airlines to bring in additional cap acity.

Even the fortnight-long strike at the Chennai port container terminal did not substantially help the market. Last year, when there was a port strike, the airlines made a killing, one airline source said.

If it is any consolation, India is not the only market without cargo. According to the airline sources, carriers flying in from the exporting economies in South-East Asia have poor loads too.