LATAM Cargo Facing Increasing Shortfalls

Once seen as the rising star in the South American air cargo market, LATAM Airlines Cargo has been facing many problems during the past twelve months as traffic demand falls.
This again forces the Chilean based carrier to rethink its cargo strategy.

LATAM Cargo reduced their freighter fleet lately. Displayed here is a B767F at Miami Airport  -  source: LATAM Cargo
LATAM Cargo reduced their freighter fleet lately. Displayed here is a B767F at Miami Airport - source: LATAM Cargo

Further freighter fleet reductions
The 2016 annual report which was recently published shows that the LATAM group’s management is very worried about the continued decline in cargo revenues and that the decision was taken to ground yet another Boeing 777 freighter.
The carrier operates three of the type, one of which has been parked for some time already.
LATAM Cargo had originally planned to operate six B767Fs and two B777Fs during this year. This is now being changed to eight B767Fs and only one B777F.

First two months 2017 are weak
Figures released by the carrier show that February cargo traffic dropped considerably whereas January just about maintained the same result as the year before.
February traffic dropped by almost 9 percent, down to 260 million RTKs.
Combined January and February results show LATAM’s cargo revenue down almost 6 percent over the same period 2016.
2016 total cargo results declined by 8.7 percent over 2015.

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Is there some light at the end of the tunnel?
The above figures are surely very frustrating for LATAM Cargo’s managers and employees who during the past couple of years have put much effort into streamlining the carrier’s cargo development as well as introducing new incentives and products for their customers.

Global air cargo figures from many carriers and airports for the first two months of this year show that there is a definite strong demand for space and that this trend is expected to continue.
Whether this demand increase will hold for the rest of the year and hopefully be of benefit to LATAM Cargo’s product, remains to be seen.
Many are warning that the present boom won’t hold as it stems from shippers who traditionally use ocean freight, shifting to air freight because many ocean carriers have cut capacity due to falling rates. This has led to dissatisfaction among ocean clients as they claim that their shipments are being considerably delayed due to routes being combined and longer transit times.

If this situation holds out for the remainder of this year, then it could be a boom year for air freight.
LATAM Cargo could then surely also benefit from that.

John Mc Donagh

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