Cathay Cargo is reclaiming dominance in global aviation

The Hong Kong-based airline is rebranding, buying more modern aircraft and exploring newer innovative solutions to meet growing demand for both passenger and cargo flights.

By R. Chandrakanth

As air cargo demand is growing at a healthy pace, expected to touch 72.5 million tons in 2025, as per the International Air Transport Association (IATA), airlines have started strategizing their freighter acquisition and route networking to meet this demand.

In its bid to capture some of the demand, Cathay Cargo, the world’s third largest cargo airline (after Qatar Airways and Emirates), in December 2023, made a firm purchase order for six all-new A350F, to become a central element in the airlines future fleet.

Under the deal, Cathay also secured the right to acquire 20 more A350 freighters. Presently, Cathay has six 747-400ERFs and 14 747-8Fs.

With belly cargo being an important component of Cathay Cargo’s expansion mode, the acquisition deal for 30 Airbus A330 neo planes by Cathay Pacific, in 2024, adds to the capacities. The deal also includes rights for a further 30 widebody aircraft.

The Cathay Group has over 100 new aircraft expected to join its fleet, with options for an additional 80, and the Group is going aggressive in regaining its dominance, having been one of the worst hits during the pandemic.

Rebranding

To return to dominance, the Cathay Group in 2023 rebranded its cargo business to Cathay Cargo aligning with the airline’s overarching brand redesign, and reinforcing the existing strong brand association and perceptions held by its customers.

And with the first of these new cargo aircraft set to arrive in 2027 and deliveries to complete by 2029, they are expected to add greater flexibility to Cathay Cargo’s freighter capacity and how it is deployed, while consolidating its long-haul, wide-body cargo operations.

Currently under development, the A350F can carry a payload of up to 111 tons and can fly up to 4,700 nautical miles/8,700 kilometers at significantly lower cost than any other freighter available today. This will enable it to serve all heavy cargo markets, including the world’s biggest freight route between Hong Kong and Anchorage.

Cathay Group Chief Executive Officer Ronald Lam said of the plane acquisitions in 2023: “This order marks another major component in our investment for the future. It reflects Cathay’s confidence in the Hong Kong hub as we look ahead to the opportunities provided by the Three-Runway System.” The Airbus freighters will link Hong Kong and the Chinese mainland coupled with long-haul destinations in North and South America as well as Europe.

Global cargo revenues to touch $157 billion in 2025

Cathay Cargo is enthused about the future, now that there is encouraging growth trend, the global cargo ton-kilometers having grown by 8.2% year-on-year in November 2024, marking the 16^th consecutive month of growth.

IATA has forecast that the global airline industry is likely to carry 72.5 million tons of cargo in 2025, a 5.8 percent increase from 2024. Cargo revenues are expected to reach $157 billion (15.6 percent of total revenues) in 2025.

“Demand is likely to grow by six percent with average yield adjusting downwards by 0.7 percent but still remaining well above pre-pandemic levels. Freight rates (quoted in 2014 dollars/kg) are expected to be $1.34, $0.06 less than in 2024 and 24.4 percent below 2014 levels.”

The cargo market has lent significant support to airline traffic in 2024, the IATA update added. “Demand surged, thanks to effervescent cross-border e-commerce and capacity limitations in ocean shipping. The outlook for 2025 remains strong, given the ongoing challenges in maritime shipping. Global yields for air cargo stopped declining in 2023 and are now around 30 percent above pre-pandemic levels. We expect cargo yields to remain stable in 2025.”

The continued geopolitical uncertainty in sea shipments routed through the Suez Canal and booming e-commerce originating in Asia, are factors helping air cargo growth.

Cathay’s tonnage increases

The airline carried 142,601 tons of cargo in November 2024, an increase of 15% compared with November 2023. The month’s cargo revenue ton kilometers (RFTKs) increased 11.9% year on year. The cargo load factor increased by 1.2 percentage points to 62.3%, while available cargo ton kilometers (AFTKs) increased by 9.8% year on year.

In the first 11 months of 2024, the tonnage increased by 10.9% to a total of 1,388,501 tons, against an 8.9% increase in AFTKs and a 4.8% increase in RFTKs, as compared with the same period for 2023.

“For cargo, the healthy market momentum seen in previous months continued into December, resulting in the highest tonnage of any month in 2024.

According to the recent Cathay Pacific’s traffic figures for December 2024, the airline carried 143,564 tons of cargo in December 2024, an increase of 11.7% compared with December 2023. The month’s cargo revenue ton kilometers (RFTKs) increased 6.5% year on year. The cargo load factor increased by 0.6 percentage points to 61.4%, while available cargo ton kilometers (AFTKs) increased by 5.5% year on year.

In the full year of 2024, the Cathay Group achieved new post-pandemic highs for total cargo carried. Cathay Cargo carried a total of 1.5 million tons of cargo in 2024, which was 11% higher than the whole of 2023.

With such outlook, Cathay said, “We project a strong second-half financial result driven by elevated cargo demand and reduced fuel prices. This is partially offset by a continued normalization of passenger yields as the supply of flights increases to meet demand in the overall market as expected.  With respect to the Cathay Group’s consolidated 2024 full-year financial result, the second half of the year has historically been the stronger of the two halves for the Group and this has been the case this year as it was in 2023. We anticipate maintaining a lower yet healthy level of liquidity going forward, similar to pre-pandemic levels.”

In July 2024, Cathay Chief Customer and Commercial Officer Lavinia Lau said the healthy demand observed in the first half of the year has continued into the second half, and the peak season in particular and the airline continues to adjust its freighter capacity to accommodate customers’ needs, including adding more freighter capacity to the Americas during the cargo peak season.

Cathay Pacific is returning to Rome on June 5, 2025 – its 12th European destination, and another step closer to the Group’s target of reaching 100 global passenger destinations within 2025.

Cathay said the growth in cargo capacity was driven primarily by the increase of belly capacity as the airline rebuilt the passenger network. There has been solid support from e-commerce business, especially from the Chinese Mainland on long-haul routes to the Americas & Europe. Together as a Group, Cathay Pacific and HK Express have reached 100% of pre-pandemic passenger flights from January 2025.

Cargo solutions for competitive differentiation

Cathay Cargo has re-launched several products and introduced new cargo solutions which are driving competitive differentiation and yielding premiums through the specialist solutions.

Some of the solutions include building API connections straight into larger freight forwarder’s booking systems, including those of DSV, DB Schenker and DHL Global Forwarding. It has developed a wide range of service options to meet the growing needs of its customers.

On top of its expert general cargo handling, it offers a range of dedicated products for shipments that require special handling, including Priority; Pharma; Dangerous Goods; Expert (for shipping heavy and bulky cargo such as engines, oil pipes, industrial parts or anything with complicated handling requirements); Secure; Fresh; Live Animal; Courier; Ultra Track; and Cool Containers.

In 2021, it launched Click & Ship, digital booking platform which has ensured booking transparency and speed, day and night. Customers can view prices and capacity, and book cargo with instant confirmation in just three steps through the intuitive booking interface.

In 2022, it introduced a suite of Priority options, offering dedicated booking tiers of priority. Priority provides greater choice and better-defined service options to customers with speed, capacity and assurance for every shipment.

Tom Owen, Cathay Director Cargo explained “The world is speeding up, in the sense that there is a growing expectation for instant gratification – for both consumers and businesses. On the consumer side of things, e-commerce revenue has been growing for years and is showing no signs of slowing down. Along with this, there is increasing demand for faster delivery options when consumers order items online.”

“Things are not much different for businesses. For B2B (business-to-business) shipments, there is always a huge variety of specialist cargo that needs to get to places quickly, including life science products, perishable items and high-value manufactured goods.

“From a law firm needing to send an urgent document to a factory requiring a spare part for machinery, you’ll find that speed, reliability and visibility of air cargo shipments are of the utmost importance in many scenarios.”

With such expectations Cathay Cargo’s logistics is top-notch, depending on customer needs, Cathay Courier, for instance, lets businesses choose between an airport-to-airport solution or include first and last-mile collection and delivery. The first and last mile is handled by its partner Linex, leveraging its worldwide network.

Top-notch terminal

The Cathay Cargo Terminal in Hong Kong is one of the most advanced air cargo terminals in the world, offering a full range of services for airlines operating.

Capable of handling an annual throughput of 2.7 million tons, the terminal has set new standards in operational efficiency, environmental design and service levels.

With Hong Kong as its hub, Cathay Cargo is constantly looking to expand its routes strategically, considering that the hub is within a five-hour flying time of the half the world’s population.

Recently, Cathay Pacific began flights to Riyadh, Saudi Arabia, complementing the cargo division’s services to the city.

From its 1946 origins as a small regional freight operator, Cathay Cargo has grown to become one of the world’s leading combination cargo carriers and has helped to build Hong Kong into the world’s busiest air cargo hub.