Analyst sees ray of hope in air cargo gloom

Analyst World ACD sees glimmers of hope in world air cargo figures for March 2016.
Although year-on-year volumes overall dropped by 0.9% worldwide, flows from Asia Pacific to Europe and the Middle East & South Asia (MESA) showed growth of 19% and 12% respectively, holding out some hope of a change for the better in a few of the world’s air cargo markets, it suggests.
Volumes from MESA to Europe were also up by 9%. Europe and MESA were the best-performing regions in terms of incoming traffic growth, up 8% and 3% respectively.
Year-on-year yields, although down, held up better than in February 2016. Worldwide they fell by 1.9%, with Africa and Asia Pacific doing slightly better than average.
With the effects of Chinese New Year now fully accounted for, this is the moment to compare the year so far with the first quarter of 2015, World ACD continues. Worldwide volumes dropped by 1.3%, and yield in US dollar terms by 17%.
However, the comparison is affected by the air cargo traffic generated by the US west coast ports strike in the first quarter of 2015.
Excluding the flows between Asia Pacific and North America, the worldwide picture for the first quarter is quite different – worldwide volumes increased by 1.4% year-on-year and the yield drop was limited to 13.6%.
For example, for outbound flows from Asia Pacific volumes were down by 3.9% with yield in US dollars decreasing by 23.8%. Taking out the flow to North America, however, these figures change considerably, to a volume increase of 1.5% and a yield drop of 16.6%.
Despite the widely-reported slump in business from China, it remained air cargo’s main growth engine. Volume in the first quarter of 2016 was up 6% in total, and by a remarkable 18% from China to Western Europe.
However, this growth came at the price of a heavy drop in yields: first quarter revenues (in US dollars) between China and western Europe dropped by 12% year on year, due to a yield decrease of over 25%.
The strongest-growing Chinese origins were Shenzhen, Guangzhou, Zhengzhou and Chengdu.

Perishables and pharmaceuticals, which have propped up air cargo performance for quite a while, continued to do so in the first quarter.
Perishable volumes increased by over 6% and pharmaceuticals by just under 10%. The latter has a yield more than 60% over that for general cargo and has suffered a much smaller yield decline; it is understandable that carriers want to grab a part of this market.
The highest yielding cargo category, live animals, which accounts for less than 1% of total cargo volumes, saw a decline of 5% in volumes coupled with a yield increase of 2%.

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