Average global air freight prices fell in January by around 11%, year on year, despite a 3.2%increase in volumes, according to new figures from air cargo data analyst WorldACD, as the decline
in jet-fuel prices since the middle of last year finally started to be passed on in the form oflower fuel surcharges from airlines.The price drop in January follows a 5.6% year-on-year (YoY) average price decline inDecember, in US dollar terms, when prices began to become seriously influenced by fuel-price andcurrency factors. On a month-over-month (MoM) basis, prices in January were down 8.5% compared withDecember, due to a combination of seasonal, currency and fuel-surcharge factors.
WorldACD said the January decline in yields (revenues per kg, measured in US dollars) couldbroadly be explained by three factors that were unrelated to longer-term demand patterns. Firstly,it estimated that almost two-thirds of the yield drop was caused by decreasing surcharges, which “would seem to be good news for everyone involved, with a possible exception for the oil companies”.
A second element in the US dollar yield decrease was the falling value of virtually allcurrencies against the dollar. And lastly, there was the usual seasonal effect of January yieldsbeing traditionally lower than December – for example, falling 4.4%, MoM in January 2013 and 3% inJanuary 2014.
WorldACD said the question of whether these figures for January 2015 reflected a bad start to2015 or business as usual was “difficult to say, given the industry’s diverging performance fromone region to another”. It noted that worldwide volumes rising by 3.2% was below the growth levelsachieved in 2014, but described this as “not too bad given that January 2014 was already part ofthe recovery that started in autumn 2013”.
In terms of regional volume variations, North America (+8.3%) and Asia Pacific (+5.5%) werethe origin regions with the largest YoY volume growth in January, with North America standing outas the only region that hardly lost volume compared to December. A substantial part of the growthin volumes from the US came from Pacific States’ business destined for Asia – “presumably a nicewindfall from the port problems”, WorldACD observed.
But the MoM performance was particularly weak for the Central & South America region,which recorded 19% volume loss accompanied by a yield drop of 10%. Africa had its smallest YoYpercentage growth in twelve months as an origin region, while Europe and the Middle East &South Asia (MESA) showed “business as usual” by continuing their below average growth pattern,WorldACD said.
These volume trends were broadly mirrored by the latest figures from the International AirTransport Association (IATA), also published this week. IATA estimated that global air freightmarkets showed a 3.2% expansion in freight tonne kilometres (FTKs) in January 2015 compared to thesame month last year, observing that he growth was slower than the average of 4.5% recorded for2014.
It noted that there was much regional variation in the January performance by the airlinesfrom the various regions. Asia-Pacific, African and Middle Eastern airlines expanded strongly, butairlines in Europe and North and Latin America all reported demand contractions, IATA noted.
IATA said that, although it was too early to be certain of a trend towards weaker airfreight, there were “at least two emerging factors which could negatively impact demand for aircargo in the coming months: Business confidence has been declining since mid-2014 and export orderstailed-off towards the end of the year; A reversal of the positive trade-to-domestic productionratio which boosted cargo volumes last year.”
Tony Tyler, IATA’s director general and CEO, commented: “January was a disappointing start tothe year for air cargo, and it is difficult to be too optimistic about the rest of the year giventhe economic headwinds in Europe and growing concerns over the Chinese economy. Add to that thecontinuing trends of on-shoring production and trade protectionism and 2015 is shaping up to beanother tough year for air cargo.”
Looking at the cargo performance of airlines by region, IATA said Asia-Pacific carriers grewtheir FTKs 6.9% compared to January 2014, supported by an improvement in regional import activity. “ Japan’s expansion is helping regional volumes, but there could be concerns over the Chineseeconomy, which saw export orders contracting at the fastest pace in three years,” IATA noted.Capacity rose 5.4% among the region’s airlines.
European airlines saw volumes fall 1.2% compared to a year ago. “The Eurozone is facingdeflationary economic headwinds and the weakness of the Russian economy is also impacting demand,”said IATA. “Weak home demand is not being offset by North Atlantic and Asian growth opportunities.”Capacity grew 3.6%, further weakening the load factor.
North American carriers experienced a 1% fall in FTKs. “This decrease, however, is mostlikely due to the strong result that occurred in January 2014,” IATA noted. “Underlying trends forNorth American volumes are positive. Trade is growing and the month-to-month comparison of FTKsshows expansion in January compared to December. Capacity fell 2.8%, continuing the recent trend ofimproving load factor.”
Middle Eastern carriers expanded their FTKs by 9.2%. “The hub strategies of the leadingairlines in the region are proving successful as network and capacity expansions help satisfydemand on international routes and serve inward trade to Middle Eastern economies,” IATA said.Capacity jumped 18.1%.
Latin American airlines suffered a 6.4% fall in FTKs compared to January 2014, as the regioncontinues to be affected by weakness in the key economies of Brazil and Argentina, IATA said. “Although other Latin American markets have increased regional trade in recent months, this has notyet translated into increased air freight demand,” IATA added. Capacity fell 2.0%.
African airlines grew their cargo volumes 5.2%. While major economies such as Nigeria andSouth Africa are under-performing, regional trade activity is holding up. Capacity rose just 2.4%,strengthening the load factor.
