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OVERVIEW OF THE SITUATION IN THE AIRFREIGHT DUE to COVID-19 PANDEMIC

10.04.2020

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Due to a drop in demand for flights due to the coronavirus epidemic, airlines are temporarily reducing the number of their flights. Since March, most airlines have stopped all flights at all: Lufthansa, Tap Portugal, JAL, Aeroflot and Russia have reduced the number of flights, and then completely stopped air traffic on international routes. Airports close terminals or completely stop accepting aircrafts. Many, even regional cities, remain without air connections to the capital's airports and other major regional centers.

According to the International Air Transport Association (IATA), in February 2020, due to the growing coronavirus pandemic, total cargo capacity worldwide decreased by 4.4%, and demand for air cargo fell by 9.1% globally and by 15.5% in AsiaPacific region. Disruption in global supply chains has led to a drop in demand, - IATA says, but a sharp decline in passenger traffic has led to an even deeper reduction in cargo capacity. The industry in general is struggling to meet the remaining demand with limited available capacity.

At the end of March, experts say, the situation has changed dramatically – almost all passenger flights, which also carry a large amount of cargo, were canceled, and transportation became possible only by cargo flights. This led to a serious shortage of capacity for many destinations, which caused a significant increase in fares.

The Chinese direction was most seriously affected by the increase in rates. For some airports, air freight rates increased 4-5 times, compared to March-April 2019. But importing companies are forced to carry their cargo even at these rates, because after a long quarantine, the production of goods was delayed and many shipments became urgent. At the same time, even with such high fares, the waiting time for departure is up to 5-8 days. Often, rates and tariffs have a not stable value and can change during the day without prior notification from airlines that compensate for their costs by transporting high-urgency cargo at higher rates.

Despite of the lack of capacity, the increased delivery time for this reason and inflated air freight rates, it is difficult to say that cargo air traffic with some countries is too much limited. All our standard destinations (pre-quarantine) continue to be served by cargo flights. In countries where there are no such flights, delivery to the nearest cargo hubs by road is organized, especially in Europe and North America. For Latin American countries, delivery schemes are now used through Europe with a change of airline or even mode of transport after European airports.

Airfreight in Russia is carried out, although with restrictions. In General, domestic traffic of logistics companies is growing, and international transport chains are changing. Volumes were reallocated by product category. Personal hygiene products, cosmetics and disinfectants are

leading the way. The number of orders for books, children's goods, sports equipment, and electronics also increased. Sales of adult products increased by 15%. Household goods also show growth: interior items, cleaning products, kitchen and bedding. All products that are used outside the apartment are not in demand nowadays. The clothing and footwear segment suffered the most, with a decline of 30%. Products for outdoor activities and fishing were also outdated. Gift and souvenir shops are also experiencing a crisis.

For airfreight of large and urgent shipments charters are used. The schedule of cargo flights is now quite unstable. Charter flights can be re-designed to meet the needs of shippers, while regular flights can be rescheduled, canceled or transferred to other airports based on the amount of cargo in different directions. Despite this, we were able to find the best option for air delivery for all our customers and are working hard to ensure that our customers ' business projects are not affected.

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