2016: the year air cargo rediscovered a little
confidence

January 31, 2017

December had a 'friendly' air cargo calendar in 2016: Christmas on a Sunday meant more business days in the last month of the year than the year before. And yet, it would have been difficult to predict the exceptional year-over-year (YoY) performance we saw in December:  a 9.4% volume growth coupled with a growth in USD-revenues of 4,5%. After November, December was only the second month in 2016 showing a YoY revenue increase. Contrary to previous years, the origins Europe and North America recorded strong December business, at a par with the top month October. In line with the demand for perishables, Africa and Latin America peaked in December. Asia Pacific stuck to its pattern of November being the best month of the year.

Since 2010, we have not seen a better quarterly YoY performance than in Q4 of 2016: chargeable weight increased by 7.5% YoY, whilst growth in DTKs (Direct Ton Kilometers) was 8.3%: in other words, the average distance between origin and final destination of the shipments carried, increased slightly (DTK-growth outpacing weight growth). In both 2014 and 2015, the average USD-yield in Q4 was about 1% higher than in Q3: in 2016, it was around 6% higher. With the strengthening USD, yields measured in other currencies actually grew even more. Rising oil prices may have played a role in these yield movements.

For the full year 2016, worldwide chargeable weight increased by 3.1% and DTK's by 3.4%. Growth figures in 2016 were slightly distorted by the negative Q1-data (remember the exceptional Trans-Pac air cargo in Q1 2015...). The 2016-total excluding Q1 showed a 4.4% weight growth coupled with a 5.2% DTK-increase: no tendency towards "near-shoring" yet.

This month, we may call your attention to yield developments. We have noticed for quite a while now that certain yield levels and indices are being published that are very different from our own figures. We believe that publishing some of our actual figures will help to provide you with a more balanced view on this subject. Why do we believe this? Because our data are based on a couple of million transactions every month, concluded between more than 60 airlines and many thousands of forwarders, covering more than 200,000 O&D's or trade lanes.

From this, the most comprehensive database in the business, we already publish every month (on www.worldacd.com/index) 12 different monthly yield indices (i.e. yield including charges), going back to 2008. Each index is based on all transactions reported for the markets shown, and therefore encompasses all individual O&D's in each region-to-region market.

Taking a closer look at what happened from 2015 to 2016, we noticed this:

• On westbound O&D's (Asia Pacific > Europe, Asia Pacific > MESA, MESA > Europe, MESA > North America, Europe > North America and North America > Asia Pacific) the weighted average yield (incl. charges) fell from 2.00 USD to 1.75 USD, a drop of 12.5%;
• On the same O&D's, but now in easterly direction, it dropped by 15.5%, from 1.93 USD to 1.63 USD;
• The directional difference in yields dropped to 63 USD cents between Asia Pacific and Europe (the westbound yield being the higher one), and to 94 USD cents between Asia Pacific and North America (eastbound higher). The gap increased to 49 USD cents between Europe and North America (westbound higher);
• The largest percentage drop between 2015 and 2016 came in the market from North America to Europe (-19%), whilst yield dropped least in the market from Europe to Asia Pacific (-10%).