“Are conditions finally improving for the air cargo industry?”

Posted by Conor Ward

” The air cargo industry finally has reason to celebrate as market conditions strengthened in September and there are hopes of further improvements in October.

Analyst WorldACD’s September market round-up shows that air cargo volume demand increased by 5% year on year in September — a level of increase not seen for two years. US dollar yields for September increased by 1.4% month-over-month.

“With such an increase in total weight transported, a further worldwide yield improvement over previous months, and industry sources claiming that October will be even better, one could be forgiven for thinking that the industry shows signs of improving health,” the analyst said.

Data from airlines in Europe and the US also improved in September.

At the recent Air Cargo Forum there was much speculation as to what had caused the improvements.

Robert van de Weg, senior vice president of sales & marketing, Volga-Dnepr Group, suggested that as well as a general demand improvement, the increase could be to do with shipper outlook earlier in the year.

He suggested that because there was so much free capacity earlier in the year and airfreight rates were so low, shippers were in no rush to ship products early to avoid a capacity crunch later in 2016.

As a result, they had left it later in the year to get their supply chains moving for the Christmas period, which had resulted in a boost for air cargo.

“We don’t have stats for October yet but the look and feel of it is really excellent and great,” said Van de Weg.

“The summer and spring of 2016 were pretty dead and what typically occurs then is that shippers and forwarders are not preparing for the upsurge very well because they don’t feel the sense of urgency.

“If it is so easy to move freight in May, June and July that you have to have strong nerves to go to your management and say we’ve got to prepare, we got to buy charters and do things.”

Van de Weg and Mark Whitehead, chief executive of Hong Kong Air Cargo Terminals Ltd (Hactl), also suggested that there had been a bit of a boost caused by shipping line Hanjin going bankrupt.

Looking further ahead, Van de Weg said he was “cautiously optimistic” about demand in 2017.

As pointed out by Air Cargo News, WorldACD said there was an extra Friday – one of the busier days for air cargo – in September which would have contributed to around one percentage point of the increase.

Looking at how the various regions performed, the analyst said that the origin Europe contributed most to the positive figures, with a year on year volume increase of 8%.

Asia Pacific was slightly behind at 6% and Latin America did not contribute any growth.

“At country level, the US and China stood out as the most important growth markets, both inbound and outbound.

“Also, it seems that one of the traditional ‘engines’ of the end-of-year growth, viz. Hong Kong, has started its climb towards the November peak somewhat earlier than in previous years.”

WorldACD said that growth was larger in long-haul traffic than in short haul, with the latter stagnating “almost completely”, with the exception of intra-Asia Pacific traffic which increased by 5%.

“The long-haul markets from Europe to Asia Pacific and from Asia Pacific to North America were particularly fast growing: +9% and +10% respectively.”

There is also positive news on the rate front. Drewry’s latest Sea and Air Shipper Insight report shows that the average rate paid by forwarders across 21 major routes reached $2.98 per kg in September, compared with $2.84 in August. This is the highest level rates have reached since November last year.

Although pricing does still lag behind the September 2015 figure – when forwarders were paying $3.15 per kg ­– the gap has continued to narrow over recent months and is now just 5.4% behind a year earlier, compared with a gap of 15.4% in March.”


Source: www.aircargonews.net

Leave a Reply