Demand growth accelerates in July

Many of the world’s major cargo carriers and airports have now reported their July results, and the news is almost universally good.

We say “almost” because two of the big carriers from the Americas – LATAM and Delta Air Lines – continue to report double-digit declines in cargo traffic. Otherwise, wherever you look, you will see either solid gains or, in the cases of Air France-KLM and China Airlines, smaller declines.

What this means for the full year may be debatable, but the increase in air freight demand that started in June has clearly accelerated in July.

We have also heard from various carriers that they are seeing strong pre-booking of peak-season space — something that is sure to be discussed in detail at the Cargo Facts Symposium in Miami, 10 – 12 October. (To register, or for more information, go to www.CargoFactsSymposium.com)

Now for the details…

Asia Pacific

Cathay Pacific Airways reported July cargo traffic up 5.8% y-o-y to 928 million RTKs, continuing the sharp upswing that began in June after five months of declining demand. Discussing the June results, Cathay’s General Manager Cargo Sales & Marketing Mark Sutch said: “Helped by strong perishable exports from the Americas, the overall tonnage for July remained healthy, although revenues continue to be affected by dampened yields. We saw month-end pick-up and a stronger feed out of our home market and Southeast Asia. Demand to both the Americas and India was strong, while we were able to capture more exports out of mainland China due to a reduction in the overall market capacity. The business environment remains challenging, but we have seen a growth in demand for special products and we will continue to diversify.” For the first seven months of this year, Cathay’s cargo traffic was down 1.1% to 5.92 billion RTKs.

Hong Kong International Airport reported cargo volume in July up 4.7% y-o-y to 380,000 tonnes – echoing the turnaround reported by Cathay Pacific, the Airport’s biggest customer. After a poor start to 2016, the gains in June and July have brought HKIA’s handle for the year to date back level with the first seven months of 2015 at 2.46 million tonnes. Commenting on the July results, HKIA said: “Traffic to/from key trading regions in North America, Mainland China and Southeast Asia rose most significantly in July.”

Beijing-based Air China reported its July cargo traffic up 2.3% y-o-y to 594 million RTKs. The gain was driven by an 8.1% increase in domestic traffic to 127 million RTKs, while the much larger International traffic rose just 1.2% to 458 million RTKs. The much smaller regional traffic was down 14.2% to 8 million RTKs. For the seven months of 2016 to date, Air China’s cargo traffic was up 4.6% to 3.92 billion RTKs.

Guangzhou-based China Southern Airlines reported July traffic up 9.2% y-o-y to 511 million RTKs, continuing a long-standing pattern of growth that has seen only five monthly declines in the last four years – four years in which most months have seen China Southern reporting double-digit y-o-y increases in cargo traffic. The July gain came on the back of a 10.3% increase in international cargo traffic to 376 million RTKs, while domestic traffic was up 6.2% to 133 million RTKs. For the first seven months of 2016, China Southern’s cargo traffic was up 12.3% to 3.41 billion RTKs.

Shanghai-based China Eastern Airlines reported July cargo traffic up 9.7% y-o-y to 408 million RTKs – its second positive result this year following June’s 3.8% increase. International traffic was up 13.0% to 328 million RTKs while the smaller domestic traffic fell 3.0% for the month to 70 million RTK. For the first seven months of 2016, China Eastern’s cargo traffic was down 2.8% to 2.79 billion RTKs.

Shanghai Pudong International Airport Cargo Terminal Co Ltd (Pactl, the biggest handler at Shanghai’s Pudong Airport) reported a slight (0.4%) y-o-y increase in its July cargo handle to 140,000 tonnes. This is the fifth month of positive growth following lackluster results in the first two months, when Pactl’s handle was down 1.6%, and brings the total handle for the first seven months of 2016 to 919,000 tonnes, up 2.0% over 2015.  International cargo in July was flat with July 2015 at 131,000 tonnes, while the much smaller domestic handle was up 7.5% to 8.000 tonnes (most of Shanghai’s domestic cargo moves through nearby Hongqiao Airport).

Singapore Airlines reported June cargo traffic up 11.7% y-o-y to 568 million RTKs, an acceleration of the trend of solid gains it has seen over the past year. For the first seven months of 2016, SIA’s cargo traffic was up 5.2% to 3.85 billion RTKs.

Taiwan-based China Airlines reported July cargo traffic down 5.7% y-o-y to 438 million RTKs, continuing its long-term trend of declining demand. For the year through July, CAL’s cargo traffic was down 6.8% to 2.98 billion RTKs.

Taiwan-based EVA Air reported July cargo traffic up 1.2% y-o-y to 311 million RTKs, its first positive result in seventeen months. Whether this marks the beginning of a return to growth in demand remains to be seen, and for the first seven months of 2016, EVA’s cargo traffic was down 7.9% to 1.99 billion RTKs.

Europe & Middle East

Lufthansa started to show signs of recovery with a return to growth after two quarters of declining demand for cargo when it reported July Group cargo traffic up 1.6% y-o-y to 854 million RTKs. Most notably, traffic to/from the Asia-Pacific region grew the most, up 3.3% to 393 million RTKs. Traffic with an origin or destination in the Americas also grew, albeit a bit slower, up 0.9% to 370 million RTKs. Europe meanwhile, was nearly flat, down -0.1% to 30 million RTKs, while the Middle East/Africa continued to be a sore spot as capacity jumped 7.4% to 123 million ATKs as demand slumped 3.6%. For the first seven months of this year, Lufthansa’s cargo traffic was still in the red, down 1.8% to 5.67 billion RTKs, but things are improving.

Air France-KLM continued its two-year trend of declines, reporting July cargo traffic down 6.7% to 700 million RTKs. For the year through July, AF-KLM’s cargo traffic was down 7.5% to 5.21 billion RTKs.

International Airlines Group reported strong demand for cargo in July with traffic up 5.9% y-o-y to 447 million RTKs. Year-to-date IAG’s cargo traffic was up 2.4% to 3.10 billion RTKs. IAG Group Airline, Iberia showed the most growth in July with traffic up 8.1% to 93 million tonnes and traffic up 4.5% to 610 million RTKs year-to-date.

Turkish Airlines reported July cargo volume up 13.9% y-o-y to 70,000 tonnes. For the first seven months of 2016, Turkish’s cargo volume was up 8.6% to 447,000 tonnes.

Frankfurt Airport (FRA) reported its July cargo handle up 1.4% y-o-y to 180,425 tonnes. For the first seven months of 2016, FRA’s handle was up slightly (0.8%) to 1.23 billion tonnes.

Amsterdam’s Schiphol Airport reported its July handle up 4.4% to 140,000 tonnes. For 2016 through July, AMS’ handle was up 2.0% to 937,000 tonnes.

London’s Heathrow Airport (LHR) reported its July handle up 2.6% y-o-y to 124,000 tonnes. Year-to-date, LHR’s handle was up 2.2% to 879,000 tonnes.

 Americas

Cargo traffic continued to fall steeply at Chile-headquartered LATAM Airlines Group, which reported July traffic down 9.5% y-o-y to 274 million RTKs. For the first seven months of 2016, LATAM’s cargo traffic was down 11.2% to 1.95 billion RTKs.

United Airlines reported July cargo traffic up 10.1% y-o-y to 334 million RTKs, its fourth consecutive month of positive results after a shaky start to the year. For 2016 through July, United’s cargo traffic was up 1.8% to 2.25 billion RTKs.

American Airlines Group reported July cargo traffic up 5.7% y-o-y to 294 million RTKs. For the first seven months of 2016, American’s cargo traffic was up 1.2% to 1.98 billion RTKs.

Delta Air Lines reported July cargo traffic down 11.8% y-o-y to 248 million RTKs. For the year through July, Delta’s cargo traffic was down 11.3% to 1.66 billion RTKs.