KLM Martinie Air France Cargo revenue declines amid weak demand

Air France KLM Martinair Cargo revenue fell almost 34% in the second quarter, to 606 million pounds ($667 million), compared to the second quarter of 2022, as demand for cargo remained sluggish.

A financial statement from KLM Group Air France highlights takeaways from the quarter: The joint Franco-Dutch carrier said the resumption of passenger travel led to an increase in available tonne-kilometres (ATK) of 6.5% in the second quarter of 2022.

But freight traffic, measured in revenue tonne kilometres (RTK), fell 8.5% as “the second quarter (of last year) continues to show strong demand.”

“With global economic growth slowing, ocean freight container prices have fallen and thus demand for air freight has plummeted.” The statement said. The load factor was 7.3 points lower than in 2022 (at 44.6%) and due to the increased belly capacity, yield also decreased, resulting in a decrease in unit revenue per attack of 42.1% vs. constant currency.

Air France KLM Group’s global revenue in the second quarter increased by 14.1%, in constant currency, to more than $7.6bn, driven by an 8.2% increase in passenger numbers.

in Recent interview with STAT Trade Times, “It is a difficult period at the moment,” said Gertjan Roilands, Senior Vice President Commercial Affairs for KLM Martinair Cargo. The favorable supply and demand dynamic of 2022 is actually the opposite of what we are seeing now. The passenger side of the airline industry is very strong, and given the current market conditions, there is excess cargo capacity in the belly, which means revenue is under pressure.

I think there are regional differences when it comes to productivity. In the transatlantic region, in particular, we’re seeing capacity continue to be added, so we expect yields to come under more pressure. However, we also see geographies where we have quite a stable situation, for example, Africa, which is very important to us (as a market). Demand remains relatively strong and revenues are quite stable compared to last year.”

In terms of the customer, Rowlands noted that the current market has become one where shippers have been trying to negotiate lower rates on a spot basis on the back of overcapacity.

“However, we do see some shippers wanting to move back… into long-term contracts. There are only a few instances of this at the moment, but it could mean that the market is slowly flattening out near the bottom and bringing a little bit more stability.” But, for sure, the spot market is still very prominent.”

Regarding the possibility of peak season in the fourth quarter, he said, “There will probably be some kind of uptick in the last quarter of the year, but if you ask me ‘will there be a big change in terms of market dynamics?'” “Given all indications at the moment, there is no reason to believe that will happen.”

Reflecting on CMA CGM and its cargo airline, CMA CGM Air Cargo, Rowlands said launching it during a declining market wasn’t ideal.

But, he added, “On the other hand, there is an opportunity to benefit from the partnership based on a few drivers. First, network expansion. In Asia, AF-KLM had almost no cargo capacity. Now, with CMA CGM, we are able to operate more closely. Complete in China – Shanghai and Guangzhou – as well as in Hong Kong, Abu Dhabi and, most recently, Mumbai.This gives more options to our customers.

“But apart from that, we’re really back in the charter market. At KLM Air France we only have five freighters and they’re fully utilized. By cooperating with CMA CGM we can really focus on specific full-cargo products that we previously couldn’t accommodate.” For example, oil, gas, moving cars, etc. So we will focus more on this.”

The company currently operates a fleet of 12 freighters, consisting of the A330F, B777F and B747F, and this is expected to rise to around 20 in the next four to five years, with a mix of B777s and A350Fs, added Mr Roelands.