Average air freight rates out of Asia rose in January, the first year-on-year increase in 15 monthsaccording to analyst Drewry, in a sign that carriers have managed to reduce capacity faster than
the demand decline for the world’s largest air freight market.Drewry’s Air Freight Price Index showed a 4.6 per cent rise in January for Asia outboundshipments, a key indicator for the status of the air freight market. The Drewry index also jumped8.4 per cent compared with December, indicating that demand had remained relatively firm followingthe pre-Christmas peak period, and that airline capacity cuts since December had pushed thesupply-demand balance back into a situation of capacity tightness.
The measure of 109.6 was the highest point for the Drewry index since it reached a 2011 highof 114 in October, although it was unclear to what extent the timing of this year’s Lunar New Yearholidays had contributed to the figures.
According to statistics published yesterday by the Association of Asia Pacific Airlines(AAPA), international air cargo demand among its Asia-based airline members, measured in freighttonne kilometres (FTK), declined by 13.7 per cent in January compared to the same month last year, “ reflecting the persistently weak trading environment and the closure of manufacturing plants dueto the [Lunar New Year] holidays”.
Even with a 5.3 per cent reduction in offered freight capacity, the average internationalcargo load factor among AAPA carriers fell by 5.7 percentage points, to 59.6 per cent. Thissuggests that the main capacity cuts have come from non-Asian carriers, or airlines that are notmembers of AAPA, although no broad-based data was available to support that. One non-AAPA airlineto remove capacity from the market is Shenzhen-based Jade Cargo International which suspendedflights on 31 December, taking six B747 freighters from the market, while Europe’s Cargoitaliaceased flying on 21 December and went into administration, another victim of the air cargo declinein the second half of last year.
The slump in demand has hit two of Asia’s leading cargo carriers which are responding byreducing freighter capacity.
Singapore Airlines Cargo, one of the biggest capacity providers with 13 Boeing 747-400freighters, recently cut its cargo capacity by around 20 per cent, a situation it expected tocontinue into the summer.
SIA cargo president Tan Kai Ping said: “With no improvement expected in the first half ofthis calendar year, and with stubbornly high fuel prices pushing up costs, we have takenappropriate action to reduce our freighter operations to better match capacity to demand.”
Meanwhile, cargo transported by Cathay Pacific and sister carrier Dragonair dropped 19.5 percent in January compared to the same month in 2011. The cargo and mail load factor was down by 7.9percentage points to 59.9 per cent. Capacity, measured in available cargo/mail tonne kilometres,fell by 6.7 per cent, while cargo and mail tonne kilometres flown saw a decline of 17.6 per cent.
Cathay Pacific General Manager Cargo Sales & Marketing James Woodrow said: “Apart from amodest pre-Chinese New Year rush, the cargo markets were generally soft throughout January and wereparticularly weak during the holiday and post-holiday period as factories in Mainland China ceasedoperations. Our key markets remain soft and we have been cutting capacity aggressively to matchdemand on trunk routes to North America and Europe.”
