Air freight continued its recovery in October, recording growth in revenues and volumes despitea tough comparison month in October 2013, although average prices were down slightly year-on-year
(YoY) despite booming demand for capacity out of Asia, particularly on transpacific markets,according to figures from air freight market analyst WorldACD.Average yields in US$ – the price charged by airlines per unit of cargo carried – were down by2.3%, YoY, but increased 2% on a month-on-month (MoM) basis. Total air freight volumes carriedincreased by 5.5%, YoY, according to WorldACD, a figure broadly mirrored by results published todayby the International Air Transport Association (IATA).
IATA recorded a 5.4% increase in freight tonne kilometres (FTKs) flown globally in Octobercompared to October 2013, which out-stripped growth in global air freight capacity of 4.4%, leadingto a 0.5 percentage point rise, year on year, in average load factors to 47% and a month-on-month0.2 percentage point rise. Compared to September, demand grew by 0.7% bringing freight volumes to anew record monthly high.
IATA attributed the growth to general increases in world trade and business activity that havebeen evident since the summer, as well as certain new product launches such as the iPhone 6, whichhelped drive a 6.7% increase in FTKs flown by Asian carriers in October.
WorldACD said the results for January to October reinforce the view that 2014 will turn out tobe the second-best year since 2008 in terms of air freight revenues generated by carriers, in spiteof a 10.4% average yield drop since 2011, the best post-crisis year so far.
In terms of air freight price increases among the various global markets, WorldACD said theleading lanes were from South Asia to Southeast Asia and from the US to Southern Africa, whereaverage prices rose, YoY by 12%. The greatest price falls were on the market from Northeast Asia toSoutheast Asia, where average yields were down, YoY, by almost 10%.
Reflecting strong demand for transpacific air freight capacity, where an already buoyant marketwas boosted by sea freight congestion and disruptions affecting US ports, the transpacific Chinaand Northeast Asia markets showed the highest overall YoY revenue increases of more than 14% fortraffic to the US. Revenues on US inbound traffic overall rose by 12%, YoY, with Southeast Asiaoutbound revenues growing by a similar amount.
And on a commodity basis, revenue from the carriage of pharmaceuticals once again showed thestrongest growth, rising by 9.7%, making for continued growth of its share in total air cargorevenues.
The transpacific did considerably better than other major markets in October and the full year’sfigures for the ‘TransPac’ market could still improve, given events in the western US ports,WorldACD observed. Air freight insiders have reported that US west coast port congestion has beendriving significant sea to air freight conversion, boosting an already strong transpacific airfreight peak season.
While Asia-Europe demand had seen a certain seasonal uptick but no real peak, the transpacificmarket had been “exceptionally strong”. Following several months of strong transpacific demand as aresurgent US economy and consumer confidence buoyed the US import market, extra seasonal demandfrom a number of customers has been bolstered by shippers concerned about the increasinglycongested and uncertain west-coast ports situation and turning to air to ensure products are inplace to meet pre-Christmas deadlines.
Cathay Pacific said China, Hong Kong, and Vietnam had been experiencing a traditional strongpeak season, with most freight forwarders reporting backlogs – particularly for transpacificmarkets. Whereas last year had experienced a short, sharp, peak season, driven, in particular,by the many Microsoft charters linked to the Xbox launch, Cathay said this year was “a broader peakdriven by multiple key shippers and certainly assisted by sea-air conversion due to the delays anddisruptions in the US west coast ports”.
Various carriers said Asia to Europe demand and pricing had also strengthened, partly driven byshippers and freight forwarders routeing cargo bound from Asia to the US via alternative routings,although the most dramatic capacity shortages and ‘spot price’ increases had been for thetranspacific market.
Air cargo executives are expecting the current west-coast ports disruptions, which are acombination of extended labour contract negotiations and general congestion at certain west-coastports, to take a while to resolve and the tight air freight market situation could well roll overinto the beginning of 2015, possibly until Chinese New Year.
Airlines have confirmed that the strong current transpacific demand had caused air charterprices to leap up to exceptionally high levels of US$500,000 to $600,000 for a transpacificround-trip B747 charter. Some sources reported that the strong demand and prices for air cargocharters had been boosted by the increased seasonal capacity needs of express operators such asFedEx and UPS, in anticipation of exceptionally strong fourth-quarter demand.
