Asia Pacific carriers strongly influenced by changing distribution patterns

July 2013: still no relief from the poor air cargo performance in the year so far, but at least we saw volumes increase by 2.1% Y-o-Y, providing the sector with a much needed glimmer of hope. The growth was mainly caused by the Middle Eastern carriers (+7%). European carriers as a group contributed nicely as well (+4.4%). Though volumes to/from Asia Pacific and North America improved slightly, carriers from these two areas saw their volumes drop by more than 2%. Yields dropped compared to June 2013, by about 2% in USD for almost all areas. Africa was the exception, holding yields to/from the continent at the June-level.

Last month, we mentioned that smaller air cargo countries fare better than large ones. Let’s talk distribution this month. WorldACD compared January-July 2013 with the same period in 2011.

Of the three distributor groups (Global Top-20, Regional Top-20’s and Smaller Forwarders), the global top lost volume almost everywhere and lost market share in all regions. Even in the Middle East, where this group recorded a 4% growth, its share dropped as regional forwarders’ volumes grew strongly. Other areas paint a similar picture: all Regional Top-20’s show a growing share in their ‘home’ areas. The group ‘Smaller Forwarders’ improved its share on all continents, except in the Americas. Their growth was most remarkable in MESA (+16%) and in Asia Pacific (+10%).

The Global Top-20 still come up with higher yields than other forwarders, thanks also to their large share in long-haul traffic. Whilst the yield gap (worldwide) was 21 USD-cents two years ago, it has narrowed to 15 cents this year. Separate areas show diverging images, however. In Asia Pacific, MESA and Africa, the Global Top-20 still offer more per kg. Take MESA, where the difference is anywhere between 2 and 40 cents depending on the O&D involved. In Europe and the Americas, things are different: forwarder groups produce the same average yields in Europe, but the Regional Top-20 and Smaller Forwarders in North America bring on average 24 cents more.

Do we see any big consequences of this trend? Although virtually all regional carrier groups saw their business - as a % of their total volume - with the Global Top-20 decline, the carriers from Asia Pacific really stand out. This group showed the largest shift towards Regional Top-20 and Smaller Forwarders: from 58% of their total volume two years ago to 64% today, partly due to growing their intra-Asia volume shares. Yet, the average yield that the ‘other forwarders’ bring them, are lower: the difference ranges from 11 cents on business within Asia Pacific to 24 cents on business between Asia Pacific and North America. Only the Asia Pacific carriers themselves can tell whether this distribution shift will be matched by lower unit cost.