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Issue #592

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2014 Media Kit

Network connectivity is key for viable South American air service

By: | at 08:00 PM | Air Cargo  

By Karen E. Thuermer, AJOT

President Bush’s recent tour of South America is a keen reminder of how strategic that continent is to US trade. Our neighbors to the South also play an important role when it comes to global supply chain management. Air carriers servicing the route know that all too well.

While United Cargo operates only as a niche player in the South America airfreight market, shippers who do business between Asia and South America benefit by utilizing United Airlines’ network connectivity. The reason: United circles its air service from Asia into Chicago O’Hare (ORD) and Washington Dulles (IAD) where cargo connects onto United flights to South America. The result: United links Asia and South America via its US hubs, with the fastest transit times for freight in the industry.

‘We have seen a great deal of success,’ says Neel Shah, United Cargo vice president of sales and marketing.

In South America, United services Rio de Janeiro and San Paulo, Brazil; Buenos Aires, Argentina; and Montenegro, Uruguay with wide body aircraft from United hubs at ORD and IAD.

United used to connect flights through a hub in Miami (MIA), a major transit point for aircraft coming up from Latin America.

‘But MIA did not work for us because Miami is not linked to the rest of our network in a way that made it financially viable,’ Shah explains. ‘Consequently, we loop our airplanes through Chicago and Washington Dulles and have seen great success.’

From ORD, United Cargo offers daily non-stop service direct to Japan and China. It also flies daily from ORD to San Paulo. Starting in late March, the carrier will offer direct service from IAD to Beijing. From IAD, United also flies twice daily to San Paulo continuing on to Rio de Janiero, and offers daily flights to Buenos Aires and Montenegro.

‘With the heavy amount of trade with companies like Motorola, Intel, and aircraft manufacturers between Asia and Brazil we have been able to connect those two continents with the fastest transit times for freight that exists today,’ Shah says. ‘You can come out of Shanghai or Beijing today and connect same day to Latin America over either Chicago or Washington and have your freight ready for pick up by noon the next day in South America.’

The business is good for United and major shippers with operations in locations like Singapore, Beijing, and Shanghai and San Paulo. In addition, United links Europe with Latin America, although cargo volumes are not as significant.

‘But there is a lot of opportunity there,’ Shah says.

Overall, inbound and outbound cargo volumes for United’s South America service are very balanced due to its network linkages.

‘Our team in San Paulo, for example, does not necessarily sell Washington or Chicago-destined freight,’ he states. ‘They sell Hong Kong, Tokyo and China and take advantage of the connectivity. We’ve seen very balanced flows. We are very pleased with our performance over the past few years.’

Northbound, products include perishables out of all cities mentioned. Major exports out of Buenos Aires include genetically engineered corn feed, leather goods, consumables, consumer electronics, auto parts, and aircraft components.

Auto parts supplier Dana is a big exporter out of Brazil, as is Embraer-Empresa Brasil ADS, for aircraft components.

The rates from China to Latin America are very stable, thanks in part to the restructuring of Varig, which now only offers a reduced flight schedule.

‘We are encouraged,’ Shah remarks.

Asia-related trade into South America encompasses approximately 40% of United’s business.

Solid footing for AA

American Airlines has a solid footing in Latin America where it is the premier US carrier. AA flies to 10 countries in South America and seven countries in Central America, in addition to its extensive reach throughout Mexico.

‘We have developed creative ways of expanding our networks virtually by harvesting shipments out of the region into our gateways in the Pacific, and by also using oth