Seabury Updates State of the Air Cargo Industry for Air Cargo Belgium

The air cargo industry is doing very well at the moment, but it will remain a very volatile business as new operating models are emerging. This is the message given by Seabury’s Dirk de Rooij who was the key speaker at the 3rd Cargo Talks organized by Air Cargo Belgium.

Dirk de Rooij, Commercial Director Cargo Seabury Consulting  -  photo: ms
Dirk de Rooij, Commercial Director Cargo Seabury Consulting - photo: ms

As for today’s state of affairs, it will not come as a surprise that the air cargo market is dominated by Asia-Pacific, which is driving 40 % of the global trade with Europe. “You can say that an important part of the global air trade flow is driven by Asia”, confirms Dirk de Rooij, Commercial Director Cargo Seabury Consulting.
Seabury, now part of Accenture, has calculated the global air cargo trade for 2016 at 21.6 million tonnes. In this respect they do not base their calculations on the FTK system, as they want to count only the volumes between origin and destination, avoiding the double counting of cargo that stays on board at stopovers.
The top-10 airlines (Emirates, Cathay Pacific, Qatar Airways, Korean Air Lines, Cargolux, Lufthansa, Singapore Airlines, China Airlines, AirBridgeCargo and Air China) account for 47% of the global trade, measured in FTKs. The top-10 of the forwarding leg of the business (DHL, Kuehne+Nagel, DB Schenker, UPS, Panalpina, Expeditors, Nippon Express, Hellmann Logistics, DSV and Bolloré) for about 45% of the global air trade.
Over the first 8 months of 2017 the industry had a growth rate of 11.3%. For the same period last year growth was a mere 2.2%. The import/export balance between Asia and Europe is leveling out. Seabury’s research has revealed that Asia and Europe exports drive the global air trade growth. The U.S. air export growth is much slower than the other key countries’.

China all over
The main pushers are machinery and raw materials, followed by hi-tech. “Semi-finished products turn out to be an important commodity for the air cargo business,” said Dirk. “We mustn’t forget that the finished products, for which they are used, will very often be forwarded by air as well.”
China is by far the largest overall airfreight contributor and seems to be able to maintain that status at all times. Dirk illustrated this by mentioning ‘ad-hoc commodities’. The fidget spinners that were this year’s new toy hype have caused a 38,000 tonnes spike in China’s export of toys. Baby milk powder had a similar effect (+18,000 tonnes) on the Europe-to-Asia leg.
Perishables are the ‘forgotten commodity’ of the air cargo business, said Dirk. Against a background of an average 1.7% growth in all categories since 2010, the perishables volume has risen by 3.9% over the same period and is expected to grow further in 2018.

Kiona van de Burg
Kiona van de Burg

Wide-bodies drive capacity growth
Now that the end of the year is nearing, the month-over-month growth rate seems to be decreasing. “Recently, supply and demand seems to be rebalancing as well,” said Dirk, adding that the Middle-East carriers are showing signs of slowing growth. As for capacity, growth will be driven by wide-body passenger aircraft orders.
For the years to come - 2017-2021 - freighters make up 24% of the total orders, vs 76% for pax aircraft. Integrators account for 82% of the freighter deliveries, while freight carriers are attributable for the remaining 18 percent.
As a courtesy towards his host, Dirk shed some light on the performance of Belgium on the air cargo scene. With a growth rate of 16% in air exports Belgium is in the top 3, only preceded by the Netherlands (+22%) and Germany (+18%). The fact that this figure exceeds the official figures communicated by the airports, may be explained by trucked volumes.

Volatility reigns
The European pharmaceuticals export has grown by 14%, but from Belgium it has decreased by 6%. The good news is, however, that Brussels’ grip on its catchment area in this commodity has tightened, leading to a rise of 14%.
Looking forward for the industry as a whole, volatility reigns. “New business models are emerging among all the actors,” said Dirk. He expects factories in Zhengzhou and Shanghai to be contributing largely to the end-of-year exports.
The weight-per-shipment is coming down, mainly due to e-commerce growth in the international air express. That is where the new business models mentioned above come in. Amazon is setting up its own airline. Cargolux is entering into a Chinese joint venture and is setting up closer ties with Emirates. Qatar is boosting its stake in IAG. Then there is the JV of UPS and Chinese SF Holding and SF Express’s drone license.
Dirk’s presentation was well attended. It was larded by an on the spot survey conducted by his colleague Kiona van de Burg. Her results, however, did not always match Seabury’s findings as presented by Dirk.

Marcel Schoeters in Brussels

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