“Up, Up and Away” -  Air Cargo on the Upswing

Is this the start of a turnaround?
Let’s hope so - as the past couple of years, despite lower fuel prices, have still given cargo operators many headaches.
The report released by WorldACD Market Data indicates that there is reason for optimism as “air cargo growth is outpacing trade growth.”
The ACD data gives reason to believe that the trend will hold in the coming months.
It is notable that the strong growth already registered in the last quarter of 2016, continues along the same lines during January and February and even so in March.
There is no reason to believe that the March figures, when finally on hand, will be any less than the first two months.

The main regions are booming
At least, this is what the Revenue Tonne Kilometer figures show!
Asia Pacific up by +11%, Europe at +6.5% and North America reached +7% on export and import figures.
This gave a worldwide +6.3% growth pattern.
ACD also reports that the Chinese New Year factor which normally ensures that volumes drop considerably from the Far East just after the weekly celebration, was far less noticeable this year with trade jumping back to almost normal levels in the week after CNY was over.
One can assume that these are all encouraging factors!
Latin America continues to limp behind the other main regions.
This was clearly shown in the IATA figures published for January and February.
The South American continent despite almost an 8% reduction in available capacity, finished February with just about 5% less than an already hard period in 2016.
The African carriers increased their capacity slightly (1%) but managed to generate 10.6% more cargo volume.
Asia Pacific and North America were above average.
North America capacity went down by just over 3%, but volumes were up by almost 6%.
Asia Pacific, despite CNY, grew capacity by 2% and volumes by just on 12% above last year.
Last, but not least - Europe saw a 10.5% rise on volumes with capacity up at 1.4%.
All these figures would basically be better when one takes into account the day less in trading as 2016 was a leap year.

Cautious optimism - or real dangers ahead?
Everybody happy?
Probably not, as the year has a long way to go and there are too many dangers lurking around the corner which could put a damper on further results.
Fuel prices, which until now have been a reason for optimism in the airline boardrooms, are again on the rise.
The rate structure on almost all sectors is far away from what the carriers could see as “reasonable bottom line indicators.”

But - it is the worldwide political scene which gives more reason for skepticism.
The sabre-rattling between East and West, or better said Russia and the USA has been going on for some time, but may get out of hand if solutions are not found for getting some semblance of peace in Syria and other Middle East countries.
Negative rhetoric at the moment - but will it turn to conflict?
China is running a thin line with its continued support for North Korea, a country it seems which Mr Trump has set his military eyes on.

Germany and China as the largest world exporters are under fire from a U.S. government which claims unfair trade practices and has “vowed” to curtail both areas with heavy import taxation.
Will it come about? - who knows - but trade uncertainty is there.

And - finally, deciding elections in France and Germany, whereby if results are leading to a massive move to the right, then trust in the economies would drop and one can only imagine the short, medium and long term consequences.

Optimism is needed and a return to political and economic sanity.
Then, 2017 could be “Up, Up and Away” for the air cargo scene.

John Mc Donagh