Asia Pacific tonnages rebound as stability returns to some markets
Air cargo tonnages from Asia Pacific rebounded strongly, as expected, in the second full week of May after dropping during ‘super golden week’ national holidays in East Asia in early May, in what was a rare relatively stable or predictable week after nearly three months of enormous turbulence.
According to the latest weekly figures from WorldACD Market Data, chargeable weight from Asia Pacific bounced back with a +11% week-on-week (WoW) increase in week 20 (11 to 17 May), taking volumes from the region back up to their level prior to Labor Day holiday period in China and various national holidays in Japan and South Korea. That +11% WoW rebound is an exact repeat of the recovery in tonnages from Asia Pacific in week 20 last year.
Meanwhile, tonnages from Central & South America (CSA), North America, and Europe dropped by -5%, -5%, and -3%, WoW, respectively, in this year’s week 20, with the decline from CSA reflecting the end of the seasonal flower surge for Mother’s Day in the US and Canada, and with Ascension Day holidays limiting tonnages from Europe. Volumes from Middle East & South Asia (MESA) origins managed a further small WoW increase (+1%), but the big rebound from Asia Pacific was the main factor driving up worldwide tonnages by +3%, WoW, taking them +2% higher, year on year (YoY).
Spot rates stable
Average worldwide spot rates were stable in week 20 – including from Asia Pacific, despite the rebound in volumes – with worldwide average spot rates of $3.67 per kilo standing +48% higher than the equivalent week last year, based on the more than 500,000 weekly transactions covered by WorldACD’s data. But a +2% WoW rise in contract rates, mainly driven by increases from North America (+3%), pushed up worldwide full market rates by +1% to $3.23 per kilo, based on a mix of spot rates and contract rates.
Worldwide air cargo capacity in week 20 edged back upwards by a further +1%, including WoW increases from Asia Pacific (+3%) and MESA (+2%), with CSA (-5%) and Africa (-2%, WoW) the only two regions in negative territory. But compared with week 7, prior to the attacks on Iran by the US and Israel, worldwide air cargo capacity was down by around -6%, mainly due to the continuing deficit of capacity to and from the MESA region, where capacity is down by about -32% compared to pre-war levels. Within that region, South Asia capacity is down just -9% compared with its levels in week 7, but capacity to and from the Gulf area is still barely half its pre-war levels (-49%).
Capacity reintroduction stalled
Plans by major Gulf carriers to reintroduce additional capacity this month stalled and went into reverse after Iran or its proxies launched further drone attacks on targets in the UAE, including a 4 May strike on the Fujairah Oil Industry Zone and a drone strike on 17 May that targeted the Barakah nuclear power plant.
Although the outlook for the conflict in the Gulf remains unclear, and the situation is highly volatile, one area of improvement for air cargo has been a fall in jet fuel prices to around $162 per barrel in the week to 15 May, compared with a peak of $209 per barrel in early April. That drop of more than 20% has been accompanied by a sense of growing confidence among major airlines in recent days that they are unlikely now to face significant jet fuel shortages on a global basis, partly because refineries in various parts of the world have been prioritizing the production of jet fuel. That moderation of jet fuel prices in recent weeks limits the likelihood of further major global air cargo rate increases on the basis of fuel prices rising. Nevertheless, jet fuel prices remain around +80% higher than this time last year, and there are shortages in some parts of the world, leading to some services been cancelled, and limiting the pace at which capacity may return to certain markets.
