2JanJJaAir cargo still stagnant, but market shifts continue

As it unfolds, the story of air cargo in 2015 threatens to become repetitive: volumes are stagnant and yields keep falling. August showed a year-over-year (YoY) volume increase of 0.9%, whilst month-over-month (MoM) USD-yields fell again, this time by 1.2% (NB: Yields in Aug 2014 decreased by 0.8% vs July 2014).

Africa and Latin America, the smaller regions in terms of air cargo, bucked the trend, however: Africa was clearly the region-of-the-month, showing a volume increase in air exports of almost 10% YoY coupled with a MOM yield drop of 0.2% only. Latin America was positively in the news, for the first time in many months. It saw MoM yields increase by 3.5% for outgoing and by 1% for incoming traffic. Unfortunately, it was one of two regions recording a (small) negative volume growth YoY; the other one was North America.

Falling yields ought to be good news for shippers and forwarders, yet they seem to take the view that – given the present low fuel cost - prices are not coming down fast enough. Airlines may well take a different view, viz. that the worldwide USD-yield drop of 18% over the past year properly reflects lower fuel cost, since fuel cost had become 1/3 of their total cost before the roughly 50% drop in oil prices in the past year… Whatever the case, airlines must have welcomed the small MoM USD-yield increase in August in more than half of the interregional markets:
• from Africa to Asia Pacific, Latin America and Europe;
• from Latin America to virtually all destination regions;
• from Europe to Africa and Latin America;
• from the Middle East & South Asia (MESA) to Asia Pacific; and
• from North America to all destinations except MESA and Africa.

Is there any solid good news for airlines at all? There is, but for certain groups of airlines and for certain markets only. We compared the period September 2014-August 2015 (i.e. the most recent 12 months period) with the year 2012, to see the changes in the market position of airlines, grouped by where they come from.

No kudos, of course, for guessing that airlines from MESA fared best: they trumped other carrier groups hands down, increasing their air cargo volume by 31% against a worldwide growth of 11%. Airlines from Asia Pacific grew by 10%, whilst European and North American carriers stayed behind the worldwide average, with growth of 5% and 0% respectively.

MESA airlines performed well above average in the markets to and from their region. The same could not be said for the other groups: Asia Pacific airlines as a group were on average, whilst the groups of European airlines (to some degree) and of American airlines (in particular) lagged behind in the markets to and from their own continent.

Markets to North America grew by 16%. European carriers figured prominently in this development with a growth of 17%, strongly driven by their exceptional increase in business from Asia Pacific to North America. However, in the total business to and from the area Asia Pacific, European airlines missed the boat, so to speak. Interestingly, North American airlines did very well in markets from Europe (+15%).

In one of the top growth markets, Asia Pacific to North America and v.v., volumes increased by 32% resp. 19%. Yet, the beneficiaries of this growth were all non-American: the bulk of the growth was realized by airlines from Asia Pacific, airlines from Europe and MESA showed the highest % growth in this market, albeit from a modest base, but airlines from North America actually saw their business shrink in the past three years.