September 2016: decent figures at last ...
We had not seen it for two years, a volume growth of more than 5% year-over-year (YoY), and yet, that was September's gift to the beleaguered air cargo world. With (i) such an increase in total weight transported, (ii) a further worldwide yield impovement over previous months, and (iii) industry sources claiming that October will be even better, one could be forgiven for thinking that the industry shows signs of improving health.
What caused this improvement in September?
The origin Europe contributed most to the positive figures, with a YoY volume increase of 8%. Asia Pacific followed suit with a 6% increase. Unfortunately, Latin America again did not contribute any growth: the area remains in the doldrums. At country level, USA and China stood out as the most important growth markets, both inbound and outbound. Also, it seems that one of the traditional 'engines' of the end-of-year growth, viz. Hong Kong, has started its climb towards the November peak somewhat earlier than in previous years.
With a 1.4% increase month-over-month (MoM), worldwide yield - expressed in USD - added some further lustre to the uplifting September data.
One slight note of caution, though, which will not come as a surprise to the more analytically inclined among us. When making YoY comparisons, one could look whether the months compared have the same number of 'strong' and 'weak' cargo days. This year, the month of September counted one Friday more than last year. That simple fact causes the 5.2% growth to be actually inflated by a full 1%-point. But that should not diminish the upbeat feeling September has generated!
The third quarter of 2016 has been better than the second: YoY volumes were up 3.2% (vs +2.3%), whilst yields - after having slipped in Q2 - slightly increased. Carriers based in Europe showed the highest growth (+4.6%), followed by those from Asia Pacific (+3.2%) and the Middle East (+2.9%). Among the larger forwarders, Expeditors, CEVA and Agility chalked up the highest growth in Q3.
In our previous trends message, we introduced the concept of DTK's or Direct Tonne Kilometers, i.e. the weight carried multiplied by the shortest distance between origin and destination of a shipment. We created this measure to get a better understanding of the more traditional growth figures. In measuring both the changes in kilograms and the changes in DTK's, we are able to see exactly how the ratio short/long haul changes. That is not the case when measuring only in FTK's, since that measure combines changes in markets served with changes in operational patterns: a shift in direct/indirect carriers operating in a particular market, changes the FTK's without changing the volume on the O&D concerned.
In Q3, worldwide kilograms YoY increased by 3.2% whilst DTK's grew with 4.3%. Thus, growth was larger in long-haul traffic than in short haul. Actually, the latter stagnated almost completely, with the exception of intra-Asia Pacific traffic which increased by 5%. The long-haul markets from Europe to Asia Pacific and from Asia Pacific to North America were particularly fast growing: +9% and +10% respectively. Interestingly, we also noted that business originating in (or destined for) carriers' hubs, actually did not grow at all, meaning that indirect transport (business via carriers' hubs) was responsible for the entire YoY growth in Q3.