Part II: MARKET DEVELOPMENTS 2014
- A tough start to the year - with the end of the first quarter showing positive signs of recovery.
- A year in which almost all analysts were basically showing the same trends, hopes and downfalls throughout the year.
- Asian-Pacific traffic started its pick-up again by the middle of 2014 and this was seen as a positive barometer for most other regions.
- Latin America and Africa, which had high hopes of being rising stars during 2014, seemed to have suffered most. South America, due to a massive drop in imports and Africa because of too much capacity and the continuing Ebola crisis in West Africa.
- Consumer demand in Europe picked up towards the end of the third quarter. Many say it is due to the large amounts of cash on hand as banks continue their policy of not wanting the public’s money and offering rock bottom interest rates. Hence, a spending spree.
- e-commerce development continued strong growth. China joins the bandwagon here and the future potential is enormous.
- General airfreight rates stayed pretty much stagnant throughout the year. This is still a worry for carriers flying along the traditional Europe - Far East sectors. However, rates on the
Asia-Pacific lanes picked up in the 3rd and 4th quarters.
- Pharmaceutical and perishable goods continue to grow. This especially in the pharma sector where worldwide demand has opened new traffic lanes. China, India, the USA and Europe are all plying for this market segment. Rates for these goods are high as they demand special handling, storage and transport. Airlines have been quick to seize on this opportunity by opening new means of pharma and sensitive perishable modes of transport. High rates generated in this market segment go some way to alleviating the general low air cargo rate problem.
- Hi-tech products, especially those moved within the last quarter of the year, have been moved to a large part by air. The traditional seasonal demand showed this year a considerable pick-up
and last minute transport by air.
- Europe has generated its own set of problems with the start of the embargo on goods to Russia. Some of this initiated by the EU governments and others in retaliation by the Russians.
Therefore, European consumer confidence and trade activity has weakened.
- Despite some positive movement in 2014 with regards to airfreight movement, the situation remains quite critical.
Due to the world political scene, especially that in Russia, Ukraine and the Middle East, there has been no real noticeable increase in global business confidence. This was most noticeable during the second half of 2014.
- Airline costs were helped somewhat by the sharp drop in fuel prices especially during the last quarter. This may have not helped all that many carriers, as fuel hedging contracts signed earlier by them would have ensured that they still had to pay the contracted price.With rates still stagnant and in some cases falling again, this leaves the carriers still walking on a very thin tightrope. There are cries from the shipping industry for airlines to reduce or abolish the Fuel Surcharges still in place. A valid argument, but how would the bottom line of many of the global airlines look like by mid-2015 if this were become fact?
John Mc Donagh / Heiner Siegmund