October 2016: growth in line with industry predictions
One month ago, we reported solid year-over-year (YoY) growth for September. At the time, industry sources - gathered in Paris for TIACA's bi-yearly event - told us that October would be even better, and right they were. The September YoY volume growth of around 5% was eclipsed by the 6.2% YoY growth in kgs which we saw in October. American and European carriers contributed most to the 3% MoM growth in yields (in USD), a higher MoM growth for this month than in previous years. With that yield improvement, October was clearly a good month for air cargo. Actually, the real growth may even be somewhat understated, as October 2016 had less "good cargo days" than October 2015.
In DTK - Direct Ton Kilometers, our new measure multiplying weight with the shortest distance between origin & destination of shipments - the October YoY growth was higher than the pure volume growth: 7.4% vs. 6.2%. We introduced the DTK-concept since the traditional FTK's are insufficient to tell us what happens in terms of true market development: after all, a change in FTK's combines market changes with purely operational routing changes.
Our measures (i.e. kilograms and DTK's combined) reflect what actually happens in markets. A YoY DTK-growth outpacing YoY volume growth, proves that shipments were moved (on average) between origins and destinations further apart than the year before. In other words, the 6.2% volume growth was realised more in longer haul than in shorter haul markets. A lot is being said lately about bringing the production of goods nearer to the place of consumption (near-sourcing). Such a trend may well exist, but it is not yet visible in air cargo flows.
The undisputed driver of the October results was Asia Pacific, in particular the origins China and Taiwan, with YoY volume growth of 12% and 19% respectively, accompanied by a MoM yield growth of 12% resp 5%. Although yield increases are not uncommon towards the year's end, the 9% increase from Korea deserves mention. Good news, at last, for long-suffering South America, where yields improved with 10% MoM with volume growth of 3.6% YoY. MESA and Africa held their own (volume growth in line with the worldwide average, though losing a little in MoM yields), whilst origins Europe and North America were rather flat.
Sub-dividing the world in six different regions (Asia Pacific, Europe, Africa, etc), we get a total of 36 geographical markets, six intra-region and thirty interregional.
Over the past three months, half of these markets contracted YoY, whilst the other eighteen expanded. Expanding markets accounted for 77% of the total business: simply put, the "have's" outperformed the "have not's". That was not the case among forwarders; the top-20 grew less than the rest, albeit it by the smallest of margins. Among the larger intracontinental markets, Europe to Asia Pacific came out on top, with volume up by 11%. Here the growth came from European and MESA carriers; those from Asia Pacific suffered a small decrease in volume in this market. In one of the world's largest markets, intra Asia Pacific, volume grew by 7% but DTK by only 5%, bucking the worldwide trend for this period.
Worldwide, European carriers as a group performed best (YoY volume +6.4% over the last three months), followed by carriers from Asia Pacific (+4.8%). Two of the largest African carriers in our database must have felt quite upbeat, recording double digit growth.
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