U.S. Travel Ban Is Expected to Snarl Trans-Atlantic Airfreight

The U.S. 30-day ban on some travel from Europe could have a significant impact on the movement of trans-Atlantic cargo flown in the bellies of passenger planes, driving up shipping rates and crimping airfreight capacity, industry executives said.

President Trump suggested in his Wednesday night address that the restrictions would also apply to cargo, though the White House later said they applied only to people.

However, more than 60% of the airfreight that moves between Europe and the U.S. travels on passenger flights, well above the world-wide average, according to cargo data provider WorldACD. Those shipments include electronics and cross-border e-commerce, as well as pharmaceuticals and medical supplies. “Given the importance of belly capacity for air cargo in this market, clearly the measures announced yesterday will cause a severe drop in capacity offered,” WorldACD Managing Director Gerard de Wit said.

Airlines faced with a reduction of passenger volumes will likely cancel flights between Europe and the U.S., said Brandon Fried, executive director of the Airforwarders Association, an industry group.

That would squeeze capacity for “vital air cargo shipments that depend on passenger flights,” Mr. Fried said. “Everything from technology goods to health care-related shipments including organs, tissue samples, medical equipment, machine parts.”

Airlines are scrambling to respond to the ban, which restricts European travelers from 26 countries but doesn’t apply to the U.K. and Ireland. Last year, there were roughly 200,000 flights scheduled between the U.S. and those countries, equivalent to around 550 flights a day, according to the International Air Transport Association. The trade group issued a statement Thursday urging governments to prepare for the adverse economic impact of such measures.

The new U.S. requirements come as airlines already have canceled thousands of flights because of cratering demand and prior travel restrictions to the countries worst hit by the virus, including China and Italy.

Dozens of U.S., European and Asian airlines suspended service to mainland China in the wake of the coronavirus pandemic, slashing trans-Pacific capacity for high-value, expedited goods such as electronics. World-wide air cargo fell by 2.7% in the first two months of 2020 compared with the previous year, with volumes originating out of China and Northeast Asia, including Hong Kong, down 7.3% and 7.8%, respectively, according to WorldACD.

Some companies have been flying in auto parts and other important freight that would usually ship from Asia by ocean. Containership operators have canceled roughly 110 trans-Pacific sailings from early February to early April as the shutdown of Chinese factories amid the outbreak reduced the flow of oceangoing freight. Farm equipment-maker Deere & Co. is budgeting an extra $40 million in expedited freight costs for the current quarter to help ensure parts from Chinese suppliers can reach its facilities, the Moline, Ill.-based company said in an earnings call last month.

Now companies that arrange shipments by air are bracing themselves for potentially dramatic effects on trans-Atlantic routes.

“The trade between Europe and North America for airfreight is dominated by passenger aircraft, more so than any other trade lane,” said Brian Bourke, chief growth officer with Seko Logistics LLC, a U.S.-based global freight forwarder. He said the travel restrictions would have “an immediate and serious effect” on capacity, adding, “we do expect market rates to significantly increase in the immediate future.”

Europe is also a gateway to the Middle East and Africa, and global connections have already been severely limited because of the reduction in passenger aircraft, Mr. Bourke said. “This is going to create an enormous amount of friction at a time when global freight is needed more than ever.”

Source: https://www.wsj.com/articles/u-s-travel-ban-is-expected-to-snarl-trans-atlantic-airfreight-11584040963

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