“The outlook for air cargo is clearly getting better” - this statement issued by the IATA press department gives an indication that things may be picking up.
But is this really the case and will the second half of this year show improvements which could carry on into 2015?
It’s interesting to note that the IATA figures also show that the demand for air cargo is actually growing slower than the present global economic activity.
Does this then mean that other modes of transport are continuing to siphon off lucrative air cargo revenues?
Freight tonne kilometer (FTK) growth in August 2014 was +5.1% over August of last year and year-to-date FTK growth was listed at +4.5% over January - August 2013.
The increase is seen to have mainly been driven by domestic markets, whereby international FTK’s dropped back.
But does this mean carriers are starting to make money on cargo?
Not really - when one sees that the average Load Factor (LF) is still stagnating at around 45%. This figure represents an average of all aircraft in total, be they freighters or passenger bellies.
The yield factor remains an issue where carriers are still fighting an uphill battle.
Good performance in July and August was given by the Middle East carriers who registered cargo growth of around 7.8%, followed by Asia Pacific airlines that showed a growth of 6.3%.
It is said that a decent increase in Chinese exports is seen as positive growth in the region also for the coming months.
The Middle East carriers have a year-to-date increase of almost 10% and this can be largely attributed to their concentration on growing links into developing markets such as Africa as well as increases in the perishable markets. Their capacity on offer has also risen by almost 6% during this year.
North America, always a difficult market to pin down, managed to up their freight volumes by more than 5% compared to August of last year. Capacity on offer fell slightly and there is cautious optimism that the weakness of the first quarter is behind them and growth trends are seen as positive.
At the back of the line are European airlines.
A very low 1.4% growth was registered with strong signals this month that this will go down even further as the German export figures show a very fast decline in the past two months.
Some intelligent wags put this down officially to the late start of the summer vacations in Germany.
This is not the case as export to Russia has suffered considerably and also despite a lower euro exchange rate, to the United States.
Latin America remains stagnant with only just over 1% of growth and this is put down to continued decline in regional trade and very poor performance of the Brazilian economy.
And - the winner is Africa!
Capacity on the African continent went up by over 4% in August. Much of this can be attributed to continued expansion in the region by Middle Eastern carriers.
Year-to-date- growth is however registered at somewhere near 10% - but here, warnings are out that this remains a volatile market and that the South African economy is showing signs of a slowdown.
On the face of it - positive news
But, as we question above - are the carriers getting a decent yield on this?
No, they are not.
Rates from the Far East, despite the pickup in traffic are nowhere near what they used to be.
This applies also on the North Atlantic sector.
Capacity continues to rise in the form of more wide body belly space and this results in carriers who fly the same routes “having to be flexible” on their rates in order to get the business.
The capacity increase is necessary in order to cope with the ever increasing worldwide passenger demand for travel.
It’s all well and good when capacity on offer continues to rise but the market, specifically the shippers and freight agents have to give the airlines a fair deal and not make the mistake of misusing capacity on offer to push rate down even further.
Let’s face it! - carriers worldwide are still riding a rough horse with regards to air cargo financial returns.
Strikes by Lufthansa and Air France pilots, continued embargo measures between the EU and Russia, stronger currency fluctuations as well as the uncertainty of the way fuel prices will go.
All of this and probably more to come make it difficult to see where profits can be made in this sector.
Hence, the still apparent airline board room reluctance to invest further in cargo operations and a continued scale down of freighter fleets still makes the future uncertain.
John Mc Donagh