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More misery for apparel houses as air freight rates ex-Bangladesh double

Black_cats

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More misery for apparel houses as air freight rates ex-Bangladesh double
Dhaka airport

Photo 85974375 © Shariful Islam Palash - Dreamstime.com

By Bangladesh correspondent 19/01/2021
Air freight rates out of Bangladesh have doubled in recent months, spiked by a severe capacity crunch due to coronavirus-linked operational suspensions and growing demand.

Shippers are now paying twice pre-pandemic rates for expedited shipments, which they describe as a “big burden in this challenging period”.

To carry goods to European airports, air cargo operators are charging more than $3.65 per kg, compared with $1.80 in March last year, and $6.20/kg to North America, up from $2.85 in last year.

Nearly 40 airlines were carrying cargo from Bangladesh prior to the pandemic, and half of them have suspended flights or drastically reduced frequency.

Apparel remains the top export item out of Bangladesh to the main markets in Europe and America, but the pandemic has severely affected import markets, with lower sales there, even during Christmas.

Bangladeshi apparel makers are thus receiving fewer orders and frequent order suspensions, which also brings down cargo volumes for air shipment.

Before the virus, around 700 tonnes passed through Dhaka’s Hazrat Shahjalal International Airport each day. Now, it is around 400 tonnes, which has forced the freighter operators to decrease flight frequency.

Vice president of Bangladesh Freight Forwarders Association (BAFFA) Syed Md Bakhtiar told The Loadstar most Bangladeshi cargo was carried by Middle Eastern carriers, now mostly using passenger planes with the remainder by freighters.

“Due to the fall in passenger traffic the number of flights has decreased drastically, thus the carriers increased the freight rates to cover losses,” he said, adding that the flight frequency of freighters had decreased by 50%-60% creating the capacity crunch.

Mr Bakhtiar was hopeful of a freight rate decline once air flight capacity and frequency increased after the pandemic situation eases following mass vaccination programmes.

First vice president of the Bangladesh Knitwear Manufacturers and Exporters Association Mohammad Hatem said: “Recently, I had to pay $8-$9 per kg for air shipment of goods, compared with $2.50-$3 before.

“The increased air freight rate is a big burden for apparel makers, as while the pandemic raged, they hardly get any orders that guarantee profit.”

 

Bilal9

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No issues - BGMEA can hire some cargo aircraft and run their own shipping service. Plenty of cargo aircraft laying about in long term storage which can be dusted off and put into use. Thai and S'pore Air Cargo can go pound sand....
 
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No issues - BGMEA can hire some cargo aircraft and run their own shipping service. Plenty of cargo aircraft laying about in long term storage which can be dusted off and put into use. Thai and S'pore Air Cargo can go pound sand....
Great idea. They should talk with govt and BIMAN
Lots of planes gathering dust. Just need to lease a few
 

Bilal9

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Great idea. They should talk with govt and BIMAN
Lots of planes gathering dust. Just need to lease a few
Well because of covid-19 situation, passenger traffic has ground to a halt. But cargo hasn't. In fact there is a shortage of cargo planes available. That is the reason for the cargo rates going up, elevated demand.

Look at this, Boeing itself is trying to make some extra money from this, which they need anyhow.


Boeing Set To Launch Additional Passenger To Freight Conversion Lines

To meet the increasing demand for freighters, Boeing announced on September 20th that it will open two new conversion lines in Asia. These will convert 737-800 and 767-300 passenger aircraft into freighters, as more airlines look to cargo to boost their incomes.
Amazon prime 737-800BCF Getty
A Boeing 737-800BCF in use by Amazon Prime. Photo: Getty Images

A 767-300 conversion line in Singapore
The first line to open will be for 767-300BCF aircraft. This will be at ST Engineering’s facility in Singapore and is due to open later in 2020. ST Engineering is a Singapore-based engineering group that partners with Boeing. In a statement about the launch, Lim Serh Ghee, president (Aerospace) of ST Engineering said,
“We take pride in our partnership with Boeing and, with the opening of an additional line later this year, look forward to continuing to deliver timely and quality freighter conversions.”

Boeing already has three conversion lines operating for 767 aircraft, but these are reaching maximum capacity (according to supply chain publication The Loadstar).

Stay informed: Sign up for our daily aviation news digest.
Boeing 767-300 converted freighter
The new line in Singapore will focus on converting widebody 767-300s. Photo: Boeing

A 737-800 conversion line in Guangzhou, China
The second line will be for 737-800BCF aircraft. This will be in Guangzhou at the site of Guangzhou Aircraft Maintenance Engineering Company Limited (GAMECO). It is due to open in early 2021. GAMECO likewise is a partner of Boeing (and a joint venture between China Southern Airlines Co. Ltd. and Hutchison Whampoa Ltd).

GAMECO General Manager Norbert Marx said of the opening,
“The addition of the new production line demonstrates our ability to quickly respond to market trends and requirements and is a testament to the skill and professionalism of the entire GAMECO-Boeing team.”

Boeing already has several 737-800BCF conversion lines in China, in Guangzhou, Shandong, and Shanghai.
Boeing 737-800 converted freighter
737-800 conversion will expand in China. Photo: Boeing

Conversions of the 737-800 to freighters began in 2018 and have been popular. Not only is it a more fuel-efficient option than the previous 737-400 option, but it is also a more straightforward conversion. The Boeing 737 Information Site reports it is the simplest conversion to date for Boeing.

Servicing growing orders for conversions
Converting passenger aircraft to freighters is a common way to extend the life of aircraft and takes place across many aircraft types. Significant work is required, including re-design of the interior, changes to doors and windows, and strengthening the floor to handle cargo loads.
The demand for conversion has increased significantly recently. The slowdown in passenger traffic in 2020 has made more aircraft available for conversion, and cargo demand continues to grow. We have even seen airlines using standard passenger aircraft for freight, sometimes removing seats and sometimes just filling the passenger cabin.
Boeing 737-800 BCF, Paris Air Show 2019
A look inside a Boeing 737-800BCF. Photo: Matti Blume via Wikimedia

So far, Boeing has received 134 orders from airlines for the conversion of 737-800 aircraft to freighters. The latest two orders (from an undisclosed customer) were announced just on September 20th.
Ihssane Mounir, senior vice president of Commercial Sales and Marketing for Boeing, explained the ongoing importance and growth of this program, saying,
The freighter conversion program is an excellent way to double the life of an airplane and provide operators with an economical way to replace less efficient freighters. By working with our partners to add freighter conversion capacity, we look forward to meeting the strong demand in this market segment and helping our customers scale their operations.”

Dominance in the growing freighter market
Boeing already leads the way in the freighter market. It provides 90% of the world’s freighter capacity, a market that Airbus has failed to gain significant share in (it did plan to launch an A380 freighter, but this was dropped).
777 and 747 freighters
Boeing leads the freighter market globally. Photo: Getty Images

And there is certainly space for more aircraft. In 2017, Boeing predicted that 3,260 freighters would be in service by 2037 (compared to 1,870 in 2017). To meet this demand, it expects 1,170 standard body conversions (including the 737) and 470 767 conversions, alongside new production. This could be changed by the events of 2020, but opening new conversion lines certainly keeps Boeing at the forefront of this.
 
Oct 27, 2014
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Well because of covid-19 situation, passenger traffic has ground to a halt. But cargo hasn't. In fact there is a shortage of cargo planes available. That is the reason for the cargo rates going up, elevated demand.

Look at this, Boeing itself is trying to make some extra money from this, which they need anyhow.


Boeing Set To Launch Additional Passenger To Freight Conversion Lines

To meet the increasing demand for freighters, Boeing announced on September 20th that it will open two new conversion lines in Asia. These will convert 737-800 and 767-300 passenger aircraft into freighters, as more airlines look to cargo to boost their incomes.
Amazon prime 737-800BCF Getty
A Boeing 737-800BCF in use by Amazon Prime. Photo: Getty Images

A 767-300 conversion line in Singapore
The first line to open will be for 767-300BCF aircraft. This will be at ST Engineering’s facility in Singapore and is due to open later in 2020. ST Engineering is a Singapore-based engineering group that partners with Boeing. In a statement about the launch, Lim Serh Ghee, president (Aerospace) of ST Engineering said,
“We take pride in our partnership with Boeing and, with the opening of an additional line later this year, look forward to continuing to deliver timely and quality freighter conversions.”

Boeing already has three conversion lines operating for 767 aircraft, but these are reaching maximum capacity (according to supply chain publication The Loadstar).

Stay informed: Sign up for our daily aviation news digest.
Boeing 767-300 converted freighter
The new line in Singapore will focus on converting widebody 767-300s. Photo: Boeing

A 737-800 conversion line in Guangzhou, China
The second line will be for 737-800BCF aircraft. This will be in Guangzhou at the site of Guangzhou Aircraft Maintenance Engineering Company Limited (GAMECO). It is due to open in early 2021. GAMECO likewise is a partner of Boeing (and a joint venture between China Southern Airlines Co. Ltd. and Hutchison Whampoa Ltd).

GAMECO General Manager Norbert Marx said of the opening,
“The addition of the new production line demonstrates our ability to quickly respond to market trends and requirements and is a testament to the skill and professionalism of the entire GAMECO-Boeing team.”

Boeing already has several 737-800BCF conversion lines in China, in Guangzhou, Shandong, and Shanghai.
Boeing 737-800 converted freighter
737-800 conversion will expand in China. Photo: Boeing

Conversions of the 737-800 to freighters began in 2018 and have been popular. Not only is it a more fuel-efficient option than the previous 737-400 option, but it is also a more straightforward conversion. The Boeing 737 Information Site reports it is the simplest conversion to date for Boeing.

Servicing growing orders for conversions
Converting passenger aircraft to freighters is a common way to extend the life of aircraft and takes place across many aircraft types. Significant work is required, including re-design of the interior, changes to doors and windows, and strengthening the floor to handle cargo loads.
The demand for conversion has increased significantly recently. The slowdown in passenger traffic in 2020 has made more aircraft available for conversion, and cargo demand continues to grow. We have even seen airlines using standard passenger aircraft for freight, sometimes removing seats and sometimes just filling the passenger cabin.
Boeing 737-800 BCF, Paris Air Show 2019
A look inside a Boeing 737-800BCF. Photo: Matti Blume via Wikimedia

So far, Boeing has received 134 orders from airlines for the conversion of 737-800 aircraft to freighters. The latest two orders (from an undisclosed customer) were announced just on September 20th.
Ihssane Mounir, senior vice president of Commercial Sales and Marketing for Boeing, explained the ongoing importance and growth of this program, saying,
The freighter conversion program is an excellent way to double the life of an airplane and provide operators with an economical way to replace less efficient freighters. By working with our partners to add freighter conversion capacity, we look forward to meeting the strong demand in this market segment and helping our customers scale their operations.”

Dominance in the growing freighter market
Boeing already leads the way in the freighter market. It provides 90% of the world’s freighter capacity, a market that Airbus has failed to gain significant share in (it did plan to launch an A380 freighter, but this was dropped).
777 and 747 freighters
Boeing leads the freighter market globally. Photo: Getty Images

And there is certainly space for more aircraft. In 2017, Boeing predicted that 3,260 freighters would be in service by 2037 (compared to 1,870 in 2017). To meet this demand, it expects 1,170 standard body conversions (including the 737) and 470 767 conversions, alongside new production. This could be changed by the events of 2020, but opening new conversion lines certainly keeps Boeing at the forefront of this.
This is a good opportunity for BIMAN to get into this. Buy up some boneyard fuselage and get them working. Heard British airways sent their 747 fleet straight into boneyard after renovations. Tough times to be in airlines business
 

Bilal9

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747 are great freighters.
That they are, but 767's and first generation 777's are quite popular too, now that they are being removed from passenger service and being converted to freighters. Widebodies are very appropriate for LD containers e.g. LD-3. They have specific types of LD containers per airplane.

This is for a DC-10 but you get the idea. Different types of containers for underfloor and main cabin load-outs.



Here they are loading underfloor containers


These are for 767's



 
Last edited:

Shabi1

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No issues - BGMEA can hire some cargo aircraft and run their own shipping service. Plenty of cargo aircraft laying about in long term storage which can be dusted off and put into use. Thai and S'pore Air Cargo can go pound sand....
The problem here isnt aircraft numbers it's economics, when passenger flights were in good quantity you could send out small cargo cheap and quick. Price was offset as these planes were already flying on passengers so cargo was a secondary stream they could discount also frequency of flights meant quick delivery.
Now Chartered cargo flights can pick up the slack but would have to be managed for loads large enough to justify the plane and it would be more expensive as the cost of operation solely being met by cargo.
Its a matter of 1-2yrs once vaccinations become wide spread heard IATA might make it compulsory to have a proof of vaccination to travel, so things will resume. But its a 1-2 yr burden suppliers would have to tough out.
 

Bilal9

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The problem here isnt aircraft numbers it's economics, when passenger flights were in good quantity you could send out small cargo cheap and quick. Price was offset as these planes were already flying on passengers so cargo was a secondary stream they could discount also frequency of flights meant quick delivery.
Now Chartered cargo flights can pick up the slack but would have to be managed for loads large enough to justify the plane and it would be more expensive as the cost of operation solely being met by cargo.
Its a matter of 1-2yrs once vaccinations become wide spread heard IATA might make it compulsory to have a proof of vaccination to travel, so things will resume. But its a 1-2 yr burden suppliers would have to tough out.
Narrow bodies like 737 freighters are increasingly being used for small cargo consignments. But those are for feeder airports only.

Dhaka cargo quantity is pretty huge, with a lot of apparel orders being very time-sensitive.
 

Shabi1

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Narrow bodies like 737 freighters are increasingly being used for small cargo consignments. But those are for feeder airports only.

Dhaka cargo quantity is pretty huge, with a lot of apparel orders being very time-sensitive.
As I said aircraft numbers not a problem its economics. When primary operation is passengers based rate for cargo is different since its a bonus revenue for operator. When operated primarily for cargo rates would be different. Deliveries are still being made, its just that they cost more.
 

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