Perishables, pharma and high-tech mitigate January drop in total air cargo volume

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January 2019 another volume drop in total chargeable air cargo weight, this time of 2% year on year (YoY), coupled with a dollar yield drop  of 2.5%, confirming a trend  seen over a number of months said market analyst WorldACD in its latest report. 

The smaller regions of Africa and Central & South America (C&S Am) again managed a YoY increase in outgoing business (by 3.8% resp. 0.6%), in the case of C&S Am accompanied by a YoY yield increase (in dollars) of almost 5%. All other origin regions were down YoY.

For the origins Europe and North America, the drop hovered around 4%, but even more telling was the drop in incoming business in Asia Pacific (-6% in total, -8% from the origin North America, and -9.5% from the origin Europe).

Origin China grew by 5% YoY, but the destination China fell by more than 10%.

Said WorldACD: “We observed this trend also in the past two months, but it was more pronounced in January due to the early Chinese New Year (Feb 5 in 2019). As we see it, the period preceding this day seems to have a small positive effect on outgoing business from Asia Pacific, but a more serious negative effect on incoming business.”

The countries “doing well” in January were Morocco and Egypt in Africa, and Ecuador and Costa Rica in C&S Am. 

While all individual countries in Western Europe saw a YoY drop (- 5.5% in total), the UK grew by 5%.

Stated WorldACD: “Do we witness a pre-Brexit stocking up of goods made in Britain? Germany fared worst in Europe, with a YoY drop in outgoing air cargo of 8.7% (-14.5% to Asia Pacific).”

On the product front, January 2019 was a good month for certain specific cargo categories, said the analyst: ” Apart from general cargo, valuables and dangerous goods, all categories improved YoY. The big categories of perishables and high tech grew by 6% resp. 4%, pharmaceuticals by 5% and the much smaller group of live animals by 9%.

“Trying to find out which (groups of) companies may have best positioned themselves for a good performance in 2019, we looked who did relatively well in the ‘downturn’ of 2018, compared with the bumper year 2017.”

It continued: “In spite of an overall growth between the two years of 2%, most airline groups hardly grew: airlines from Asia Pacific reported 0.7% growth, whilst those from Africa,  Middle East and South Asia (MESA) and C&S Am languished around the no-growth point.

“Only the airlines from North America (+6.3%) and Europe (+3.8%) beat the worldwide average growth. Remarkably, the Europeans improved their share everywhere, except in Europe itself.”

The world’s top-20 forwarders went from a 43.2% to a 43% market share. But within this “elite group, differences were noticeable” observed WorldACD.

The 13 forwarders with a European origin grew by 0.5% only, while the 4 MESA and North American forwarders did just a bit better (+1.5%).

I concluded: “The real winners in 2018 were the Japanese forwarders, growing their business by 7.2%, mainly driven by growth in Asia Pacific and North America. Leading forwarders in perishables, such as Kuehne + Nagel, Panalpina, DB Schenker and Newport, recorded double digit growth (between 13% and 16%) in this category.”

January 2019 at a glance:

  • Total Chargeable Weight: -2.0% year-over-year (YoY); -6.2% month-over-month (MoM).
  • General cargo -5% YoY, special cargo +4.6% YoY.
  • Direct Ton Kilometers (DTK’s): -1.9% YoY. (Given the -2% change in volume, this means that average distance per shipment hardly changed).
  • Yield dropped to USD 1.84 (-2.5% YoY, -8.0% MoM).
  • The cargo load factor dropped by 1.9%-points YoY and by 4%-points MoM.
  • Revenues ($) from the smallest shipments (0-50 kg) suffered least (-2.1% YoY), those from the largest shipments (>5000 kg) suffered most (-6.4% YoY).(

 

See www.worldacd.com/yields for more yield developments)

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