2JanJJaSeptember showing some improvement, but how does the year shape up for individual companies?
September turned out to be the best month of this year’s third quarter: a worldwide volume growth of 1.9 % year-on-year (YoY) and a modest month-over-month (MoM) yield increase (in USD) of 0.4%, the first such improvement since last February. The origin Africa continued to lead with a volume growth of 4%, similar to this month’s growth for the origins Europe and Asia Pacific. The Gulf Area recorded a volume decline of 21%, heavily influenced by the shift in Eid al-Adha from October last year to September this year.
In the month, non-general cargo grew by 7.8% YoY worldwide. This increase was mainly caused by growth in the transport of dangerous goods (+12%), perishables and pharmaceuticals (both +9%). In pharmaceuticals, Europe strengthened its dominant position (+11%), whilst in perishables, the traditional “powerhouses” Africa and Latin America lost some ground. However, in overall USD-revenues for all product categories together, Africa and Latin America lost much less than the other areas.
Judging by the first three quarters of the year, 2015 will be known as a year of modest volume growth, coupled with the largest USD-yield decrease in many years. YoY volume increased by 4.2% in Q1, by 2.8% in Q2 and by a mere 1.2% in Q3, making for a year-to-date (YtD) figure of +2.7%. At country level, Australia, Bangladesh and Vietnam stand out with a YtD volume growth of more than 20%. Vietnam managed that growth with yields dropping very little.
YtD revenues is an altogether different story. When expressing worldwide revenues in USD or CNY, we see a considerable YoY decrease of 12% resp. 10%. In a sharp contrast, the same revenues expressed in JPY or EUR show an increase of 4% resp. 8%. If nothing else, this difference reveals that it will not be easy to qualify the year 2015 as uniformly bad for air cargo. When it comes to individual companies’ results, factors other than worldwide averages come into play.
According to the so-called broad index of the US Fed, over the past 12 months the USD appreciated by about 15% against a basket of currencies from countries with which the USA trades. This will have different effects on different players. Companies with a good balance between revenues and cost in specific currencies, will see their results influenced less by rates of exchange than companies not having such a fit. Thus, the 14% decrease in USD-yields (YtD) will not necessarily mean (the same level of) bad news for all airlines.
The full dynamics of the worldwide air cargo business make it quite difficult to establish the market impact of individual trends, be they varying exchange rates, capacity changes, lower fuel prices, shifts to all-in pricing, matching and hedging, modal shifts, changes in demand or cost reductions. Much more research will have to be done to create a model describing how (the interplay of) these different trends may affect the various markets in which companies are active. WorldACD is committed to continue researching trends that may feed such a model.