AIR CARGO GROWTH - FACT OR FICTION?

The first six months of 2014 have ended and it‘s the time when air cargo statistics and presumptions are hitting the market.
IATA in it‘s recent press release states that „air cargo is stabilizing.“

Good news for the cargo industry - consumer confidence is finally rising again  /  source: Haver Analytics
Good news for the cargo industry - consumer confidence is finally rising again / source: Haver Analytics

What are we to read from that bouyant statement?
Admittedly, figures to hand are not yet relevant for the first half year, but more so, reflect on results and trends for the period January to May.
However, one can assume that if the trend prognosis is correct, then June and hence the first half year will show a shift in a positive direction.

But is this really a shift whereby the industry can start to breathe somewhat easier?

What do the figures really show?
IATA along with other institutions such as WorldACD Market Data do really come up on a regular basis with a mine of information concerning results, trends, market development, yields, tonnages and so on.
Percentage figures vary slightly from one source to another, but in general can be seen to be on par.
We have tried to dig into such figures in order to try and piece together a May and half year picture for our readers.
Figures gathered and analysed regarding tonnage are based on Freight Tonne Kilometers (FTK‘s) flown

Generally speaking!

  • May showed an overall increase in tonnage carried of an admirable 7.5% over May 2013.
  • Yields in May (based on US$) „only“ dropped by 0.2% compared to a 1.9% yield drop from April-May.
  • Outgoing volumes were highest from the Asia Pacific area, at +10%, followed by Central & South America, with +8.7% and Africa with +8.5%.
  • Europe was the only area with a noticeable yield (US$) increase of +5%. This, however, according to WorldACD figures, can be put down to „rate of exchange“ benefits. If measured in Euro, then European yields were also negligible.
  • A different trend is noticeable with inbound cargo to Africa and the Middle East, which showed yields increasing by 4.9% and and 3.9% respectively.
  • Total revenues for the period January - May grew by 5% and it is said that yield differences between the individual months were less pronounced than last year (WorldACD Market Data)
  • The increase in air cargo movements of pharmecuticals, perishables and temperature controlled goods is noticeable and more important, the yield picture has been kept in check through these commodities due to higher rates obtainable.

 

And, how did the individual regions and their carriers fare in May?
European carriers showed a tonnage increase of 3.4% which along with results to date show that the economy seems to be somewhat improved, although this can be deceiving as Germany continues it‘s strong export drive and other European countries do not.
European airlines threw a further +4% of capacity into the market mainly due to an increase of  passenger aircraft.

 

  • Latin American airlines had the advantage of a pick up in growth (trade) and increased their tonnages by almost 5%. Some say that this growth was only temporary and due to increased  cargo movements relating to the World Cup football tournament in Brazil. Here also capacity increased, this time by only 4.5%.
  • The Middle East based carriers again came out on top. Not surprising! A 9.3% tonnage rise was the result for May. Here also, it‘s interesting to note that this (and previous) result is not only due to continued expansion in their already developed markets, but also to their continued expansion in emerging markets and economies. Namely Africa and South America. Middle East airlines increased their capacity in May by 10.6%. Will they aim for an overall 15%-20% capacity increase before the year is out?
  • Africa shows a positive trend - even if only temporarily. Carriers based on this continent realized a 7.2% rise in tonnages along with an overall capacity increase of 7.5% which is on par to demand.
  • North America saw only a 2.4% increase in tonnages, which was down on April year on year growth of 3.5%. Here, capacity, compared to other regions was reduced by 0.2%. The negative showing is put down to the ailing US economy in the first 4-5 months of this year, although it‘s reported that business growth is on the up again. We‘ll hopefully see that in the June and first half year figures.
  •  Last, but not least, the Asian Pacific airlines had a strong tonnage increase of 5.3% in May and a capacity increase on offer of +6.0%. Regional trade is said to be coming out of the doldrums and one could even venture the opinion that Chinese economy, which is an important indicator for the whole region, seems to be coming up again. Not spectacular (China), but maybe hopeful.


So, it seems that it is FACT & not FICTION!
Official June and mid year figures are not yet on hand, but the general prognosis does indicate that they‘ll be at least as good as May, if not even better.
A positive half year overall result would help the industry keep faith in itself.
The negative aspect with regards to yields may well remain, despite continued growth.
Airlines live from „good yields“ and these have been a thing of the past for a very long time now.

It‘s now the time for the shipping industry to allow carriers to earn a decent yield.
We‘ve seen the result of the continued earning decline with the exodus of freighter carriers and the, in our view, unnecessary airline board room down sizing and downgrading of their  cargo departments by some carriers.

Are all these figures really of use to players in the air cargo industry or are they largely just read and then  forgotten?
It would be interesting to know! A lot of work goes into researching and compiling such, as they are meant to be a barometer for carriers, shippers, forwarders and handlers.
They show a trend, but who is benefitting from it?

John Mc Donagh
 

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