The air cargo market is going through a challenging time with demand falling from its pandemic highs back to pre-pandemic levels, capacity returning as passengers fly again and yields and rates are falling.
Andres Bianchi, CEO of LATAM Cargo says Latin America is no exception, saying imports are down though they should start recovering, exports remain robust and e-commerce is helping the domestic market.
At LATAM Cargo, Bianchi says performance this year is below 2022, which is unsurprising due to weaker economic activity and a reduction in shipments of certain commodities, which is impacting cargo demand. Capacity is returning to the market, pushing down rates.
He comments, “Most of these adjustments happened earlier than expected and, therefore, 2023 has been a more challenging market than expected.”
With many variables it is hard to make predictions but the one prediction he is making is that there will not be a significant improvement until next year.
“In our case we plan to continue executing on the plan we drew up before this downturn began as we are confident that the strategic advantages we have built position us well to take advantage of the opportunities that appear in this part of the cycle,” says Bianchi.
To deal with the post-pandemic market conditions, LATAM Cargo is focusing on customer needs and increased productivity. The airline has been taking delivery of new freighters and looking at alternative routing to reduce costs and improve digital integration. The new IT system is helping LATAM Cargo be more productive and better connected with customers.
Three years ago, LATAM Cargo announced it would convert 10 Boeing 767s into freighters, which are performing well and able to serve different markets, whether short-haul domestic services or long-haul flights.
Bianchi says, “This is part of a very deliberate strategy to build a robust and flexible network that connects South America to the world and also within itself. We decided to double down on the Boeing 763 freighter as we believe it matches our region and our strategy as perfectly as an aircraft can.”
Sustainability is key to LATAM Cargo’s long-term plans, focusing on the key pillars of Climate Change, Circular Economy and Shared Value.
The LATAM Airlines Group is committed to protecting South America’s strategic ecosystems, sending zero waste to landfill and using its connectivity to benefit local communities.
At the IATA World Cargo Symposium in April this year, LATAM Cargo won the Corporate category for IATA’s Innovation Awards for its commitments to cut plastic waste.
Plastic film has been replaced by reusable pallet covers, with a polyester version in Chile and waterproof version in Brazil.
Recyclable tape from 3M is also replacing plastic film and the three measures can save up to 85 tons of plastic a year, the equivalent of more than four million plastic bottles.
Bianchi says, “We have defined a number of initiatives to advance towards our targets and established intricate and trackable goals in collaboration with environmental organisations and experts across the region to make sure we are advancing in the right direction and at the right pace. We will continue to relentlessly pursue opportunities to reach these goals.”
As LATAM Cargo develops, it aims to provide market-leading solutions to benefit its customers and the Latin America region.
Bianchi adds, “Our aim is to provide our customers with the best solutions from, to and within South America. More specifically, this means offering reliable, high-quality products while fully leveraging the breadth and depth of our network and actively driving productivity and sustainability improvements. Combining these four elements should enable us to provide an unmatched combination of transit time and pricing options.”