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US-China airline quarrel exacerbates supply shortage for cargo

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The air service dispute between the U.S. and China over resuming passenger air travel will have spillover effects for airfreight shippers and other areas of trade as the relationship between the countries deteriorates, industry and legal experts say.

Limiting flights from each country perpetuates the shortage of cargo capacity resulting from the extensive shutdown of passenger operations due to the coronavirus outbreak and sets the stage for potential Chinese retaliation against other industry sectors.

The dustup can’t be viewed in isolation, according to China watchers, but as part of the Trump administration’s effort to rebalance trade relations in the U.S.’s favor and its new ideological concerns over civil liberties in Hong Kong.

 “You could say the decision to not grant [U.S. carriers] the number of flights they asked for is a response to the pandemic raging in the U.S., but it’s not that simple. There are clearly other political undercurrents here,” said Ashley Craig, co-chair of the international trade and logistics practice at the Venable law firm, in a phone interview.

The U.S. Department of Transportation this month said it would limit Chinese passenger airlines to two round-trip flights per week between China and the U.S. after Chinese aviation authorities slightly eased restrictions for 95 international carriers to allow them one route each per week — the same right Chinese airlines have enjoyed since March 26.

The U.S. originally planned to ban the four primary Chinese carriers — Air China, China Eastern, China Southern and Xiamen Airlines — and two smaller ones after the Civil Aviation Authority of China (CAAC) slow-rolled petitions by Delta Air Lines (NYSE: DAL) and United Airlines (NASDAQ: UAL) to resume some service in early June. 

United applied to fly from San Francisco to Shanghai and Beijing, and from Newark, New Jersey, to Shanghai, while Delta is seeking Shanghai service via Seoul, South Korea, from Seattle and Detroit. 

U.S. carriers began drawing down flights to China by early February in response to the coronavirus outbreak and ceased all passenger operations there by March 12. Chinese carriers continued to operate a limited schedule of up to 34 flights by that time — a marked change from the 325 weekly scheduled passenger flights by carriers of both nations at the start of the year.

A March ruling by CAAC effectively froze out U.S. carriers from reestablishing routes. Although it allowed airlines to operate one flight per week on a single route, they had to use March 12 as their baseline capacity limit, which was zero for U.S. carriers. 

The revised Chinese rules don’t go as far as U.S. carriers want, and officials are concerned they are riddled with conditions that make it difficult to operate even limited services. China requires airlines to take the temperature of all passengers midflight and will suspend a route for one week if the number of passengers who test positive for the coronavirus after arrival reaches five. Foreign carriers will be allowed to increase flights to two per week if they go three weeks with no passengers testing positive.

The DOT says China is violating terms of their bilateral air transport agreement by giving favorable treatment to Chinese carriers and that its reciprocal order is aimed at ensuring fair and equal access. The order, which doesn’t apply to all-cargo flights, cuts in half the number of weekly flights by Chinese carriers and requires CAAC to notify the U.S. of which carriers will operate the two permitted flights.

Air cargo constraints

How the U.S. and Chinese flight restrictions might impact air cargo is unclear. 

Passenger flights were extremely limited even before the U.S. restrictions, so any cuts worsen existing shortages of aircraft space for cargo that have led to transport delays and  forced companies to pay huge premiums to move their goods. Producers, retailers and their logistics partners heavily rely on leftover bellyhold space in passenger planes because there aren’t enough pure freighters to handle all e-commerce and freight shipments, and they offer frequent, scheduled flights. Lower-deck capacity helps keep airfreight rates down. 

Until the restrictions are lifted, U.S. and Chinese airlines won’t be able to add flights as travel demand increases in the coming weeks and months.

“Any curtailment of flights is not only regretful, but denies shippers of essential options to move their cargo in both directions,” Brandon Fried, executive director of the Airforwarders Association in Washington, said in an email.

The Chinese carriers have significant belly capacity with their twin-aisle passenger aircraft and also operate freighters to major gateways such as Los Angeles, Chicago, San Francisco and New York. Air China and China Southern are the ninth- and 10th-largest cargo carriers in the world, based on volume. Both carriers also operate dedicated all-cargo aircraft — Air China has eight Boeing 747-400s and China Southern two of them plus a dozen 777-200s.

Delta and United have been making extensive use of passenger aircraft as auxiliary freighters since March to help make up for lost passenger belly capacity.

Air cargo professionals said the bilateral air transport restrictions could lead to more transfer of cargo in secondary hubs such as Tokyo, Seoul or even Taipei, Taiwan.

“The impact could be dramatic and will change the lane segments, depending on what the Chinese government is allowing. Will that increase the need for capacity into those hub markets?” said Michael White, president of Cargo Network Services, the U.S. subsidiary of the International Air Transport Association. He even raised the possibility of affected airlines transshipping via Canada.

Conflict escalation

The conflict over airlines comes amid what some foreign policy experts are calling a cold war with China. Venable’s Craig said the DOT’s decision can’t be disconnected from the administration’s overall stance toward China.

On the surface, China is simply trying to protect against the reimportation of the coronavirus from the U.S., which is now the global hotspot in terms of confirmed cases and deaths. And it’s not lost on Chinese officials that President Donald Trump early this year implemented restrictions on travel from China, when the virus was beginning to spread there. 

The president has publicly criticized China’s handling of the initial outbreak in Wuhan and blamed it for transmitting the disease to the U.S. 

Previously, the Trump administration waged a three-year trade war with China until an uneasy, partial truce to ease import restrictions was reached in January. It also has ramped up export controls and scrutiny of Chinese-listed companies, and direct investments in the U.S. to prevent security-related technology transfers and potential espionage. 

Talks on a full-scale trade deal are on ice while the Trump administration waits to see how the Phase One agreement is implemented. Trump is insisting China uphold purchasing commitments for U.S. goods even though the global recession caused by coronavirus lockdowns has depressed economic activity and trade.  

Meanwhile, the Trump administration is considering whether to revoke special customs and travel treatment from Hong Kong. The State Department declared the territory no longer enjoys semi-autonomous status because Beijing recently imposed a national security law that would criminalize anti-government activity and enable it to increase surveillance of the population following months of pro-democracy demonstrations. Under U.S. law, Hong Kong’s special trade status can be revoked if its autonomy is diminished. 

Currently, Hong Kong exports are exempt from U.S. tariffs on China, although the level of exports to the U.S. is very low compared to the rest of the world. Possibly more damaging to trade would be any limits on technology sales to Hong Kong.

Craig, based in Washington, said the timing of the air traffic dispute is bad for importers because the exemptions for two tranches of tariffs on Chinese goods are set to expire within the next six weeks and there is no guarantee the U.S. trade representative will renew them.

If stalled talks lead the U.S. to further restrict Chinese airlines at some point, China might be tempted to seek retribution by blocking access to U.S.-flag ocean carriers such as Matson Inc. and APL, Craig suggested. That would send a message without significantly impacting Chinese exports because those carriers offer limited service to China. Retaliation against U.S. cargo airlines, such as FedEx Express and UPS, is unlikely for the same reason: The Chinese economy is trying to reboot and shippers like medical supply manufacturers and e-commerce giant Alibaba need airfreight to get to overseas markets.

Craig said the U.S.-China relationship is going backward and the Chinese may be willing to abandon the January trade deal in response to perceived slights from the U.S.

(Click for more FreightWaves stories by Eric Kulisch)

Source: https://www.freightwaves.com/news/us-china-airline-quarrel-exacerbates-supply-shortage-for-cargo

Automotive

How Car Tires Are Manufactured

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🚗 Cars are complex machines, each part made in highly specialized and specific ways, car tires included. Here is how car tires are manufactured.

🚕 Car tires are the part of your vehicle that keeps you moving forward. But have you ever wondered about how car tires are manufactured? Read ahead for a quick overview of the process.

❋ Design and Plan 👇

Designing the item you plan to manufacture is the first part of any industrial process. Car tires have been around for a long time now, and the manufacturing process is becoming increasingly digital. The design is usually created through engineering software, and the dimensions and curvature are handled with precision. After that, the tire-making machines receive this digitized format.

❋ Select Materials  👇

Most tires consist largely of rubber, both natural and synthetic. Oils, pigments, antioxidants, and other materials mix with the rubber to create each part of the tire. Tires must be crafted from quality, durable materials, including chemical agents, metallic cables, and fabric reinforcers.

❋ Melt and Mold 👇

Heat and friction work together to produce the final rubber composite that will mold the other parts of the tire. Tires are not one singular piece of rubber—they contain tread rubber, sidewall rubber, fabric-coated plies, and bead wires, among other components. A factory worker or automated apparatus then uses a tire-building machine in the shape of a collapsible drum to glue and set the tires. Finally, the tires cure over time, and subsequent heating and steaming help them fully coalesce

❋ Distribute Widely 👇

Quality control is important with tires—after all, tires must handle transporting drivers for thousands of miles on the road. After rigorous testing, the manufacturer packs the tires and distributes them to various sellers. These include tire stores all across the United States, from Trenton, New Jersey to Anderson, Indiana.

🟥 Knowing how car tires are manufactured can help you better select the parts for your vehicle. Because all cars are different and have specific needs, you should consult with a tire expert before choosing your next set of wheels.

👉↘ Source: Christina Duron is a freelance writer for multiple online publications where she can showcase her affinity for all things digital. She has focused her career around digital marketing and writes to explore topics that spark her interest.

 

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Automotive

Feast your eyes on the all-new, all-electric GMC Hummer EV

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GMC has a new all-electric version of its classic Hummer oversized SUV. This thing is a beast, as you might expect, with an advertised 350-mile range and a 3-second zero to 60 mph time. It’s a bit ridiculous to be honest, which is kind of what the Hummer has always been about so that makes sense.

Alongside a teaser, GMC released a number of press photos of the 1,000 HP bruiser, so take a look below. It definitely looks like a Hummer – which may or may not be your cup of tea.

Source: https://techcrunch.com/2020/10/20/feast-your-eyes-on-the-all-new-all-electric-gmc-hummer-ev/

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Automotive

ALYI Highlights Next Steps

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Dallas, TX – October 20, 2020 – OTC PR WIRE – Alternet Systems, Inc. (OTC PINK: ALYI) today announced plans to publish a comprehensive progress update next week targeting a Wednesday, October 28th release date.

Management indicates a number of major endeavors underway in important stages of development to include RevoltTOKEN financing partner’s efforts to finalize ICO details, next steps after finalizing the multiparty milestone agreement announced last week, and a new design path development for the company’s long-term plans for future electric vehicles in Africa.

Management anticipates wrapping up details on the above-mentioned endeavors by next Wednesday and being ready to release a comprehensive update.

For more information and to stay up to date on ALYI’s latest developments, please visit www.alternetsystemsinc.com.

Disclaimer/Safe Harbor: This news release contains forward-looking statements within the meaning of the Securities Litigation Reform Act. The statements reflect the Company’s current views with respect to future events that involve risks and uncertainties. Among others, these risks include the expectation that any of the companies mentioned herein will achieve significant sales, the failure to meet schedule or performance requirements of the companies’ contracts, the companies’ liquidity position, the companies’ ability to obtain new contracts, the emergence of competitors with greater financial resources and the impact of competitive pricing. In the light of these uncertainties, the forward-looking events referred to in this release might not occur.

Alternet Systems, Inc. Contact:
Randell Torno
info@lithiumip.com
+1-800-713-0297

Source: https://otcprwire.com/alyi-highlights-next-steps/

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