End-of-Year Revenues Shaping Up

October 2013 reinforced the most recent trends in worldwide air cargo: a 5.3% volume increase over October 2012, accompanied by a 3.5% USD-yield improvement over September 2013. These are growth figures we had not witnessed for quite a while. Whilst specific cargo products again grew more in volume than general cargo, the latter category contributed most to the yield improvement. Analyzing this improvement for different weight breaks, we saw all classes in the plus, with the larger shipments - above 1000 kilograms - performing best (+3.5%).

Y-o-Y volume growth for October was considerably weaker in express cargo (+1.2%) than in regular cargo (+5.5%). In the larger markets, North America to Asia Pacific recorded a Y-o-Y volume growth of more than 11%. Finally, revenue development also gave some reason for cheer with a growth of 1.2% in USD-revenues over October 2012: here Origin Europe was the best performer (+4.3%) whilst Origin Middle East, for a change, lagged behind (-3.7%).

Getting closer to the end of the year, we wonder whether the October figures spell better times ahead for our industry. Improvements towards the end of the year have been a trait of the air cargo business for a long time, with the year 2011 as a notable exception. Will business go further up in the last quarter of this year? We take a look at the two largest air cargo origins, Shanghai (SHA) and Hong Kong (HKG), the cities from where many Christmas presents find their way into the world at large.

Although every year has a slightly different pattern, the constant factor in air cargo is a dip in July/August and a peak in October/November. This applies worldwide to both volume and yield. However, this difference between dip and peak is usually much more pronounced ex HKG and SHA than in other markets. More than 60% of revenues generated from HKG and SHA are derived from shipments to Europe and North America, destinations that appear to be much more sensitive to year-end fluctuations than destinations within the Asia Pacific region itself.

July-revenues as well as October-revenues in the market from HKG & SHA to Europe & North America had steadily declined since 2010. This year they improved by 5% resp. 8%, reversing the downward trend. October-revenues were 29% higher than July (NB: for air cargo worldwide, this difference was 11%). These figures underpin the pattern mentioned above: the July-October change was +25.4% in 2012 (+8.7% worldwide), and +14.6% for the years 2010-2012 taken together (+6.1% worldwide).

So, the big question is: have Shanghai and Hong Kong peaked already or will November become their top-performing month? Time will tell. What we know already is how revenues in the past years behaved in November compared to October, both in the specific HKG&SHA-markets and worldwide. In 2010, November revenues were lower by 4.2% resp. 3.3%. For 2011, the figures were 2% plus and 2% minus respectively. But the biggest change came in November last year: in the specific HKG/SHA-markets revenues were 21% above October, against a 3% increase worldwide. We await the results for November with keen interest.