January results are in. But are they meaningful?
The International Air Transport Association released its air freight market analysis for January 2015, showing an overall 3.2% year-over-year increase in worldwide cargo traffic. The growth was driven by a 3.9% increase in international traffic, while domestic traffic was down 0.9%. From this, IATA concludes that “air freight makes a slow start in 2015,” and goes on at some length about it being difficult to be optimistic about the rest of the year.
While it is true that, for a variety of reasons, 2015 may not be a year of strong growth in demand for airfreight, we disagree with IATA about the relevance of the January results. As we have pointed on an annual basis for over a decade, year-over-year comparisons of January air freight traffic are almost meaningless. And the same is true for February. The impact of the timing of the Lunar New Year holiday in China and some other parts of Asia is enormous. Factories shut down for up to three weeks, and shippers rush to get as much as possible into the air or onto the ocean in advance of the closure. Since the holiday can fall almost any time in January or February, the only way to make a meaningful year-over-year comparison is to look at the two months as a single entity.
And yet in five pages of detailed analysis of the January data, IATA does not once mention the impact of the New Year holiday.
With that in mind, we will not offer our usual commentary on the January results on a region-by-region basis. We will save that for next month, when we have the February data in hand. However, all is not lost, because one of the world’s major air cargo players has published its February results, and perhaps that will give us a hint of what to expect.
Shanghai Pudong International Airport Cargo Terminal Co. Ltd, or Pactl as it is commonly known, is the biggest handler at one of the world’s busiest cargo airports, and is often viewed as a bellwether for the entire industry. That may be giving Pactl more significance than it deserves, but it is definitely important, and its January and February results may offer some indication about the general trend in the rest of the world.
And what are those results? After reporting its January handle up 12.9%, Pactl reported its February handle up 29.3% to 104,000 tonnes. For the combined two months, Pactl’s handle was up 19.8% to 229,000 tonnes. Okay, Pactl has been outperforming the industry for some time, and it’s 13% y-o-y increase in January is over three times what IATA reports as the world wide average for international growth (Pactl’s handle is almost entirely made up of international cargo), and we are not suggesting that the percentages can be applied elsewhere. But the key takeaway from Pactl’s report is that the year-over-year growth in its February cargo handle was over twice that of January, and that its combined January/February growth of 20% was greater than its full-year 2014 growth of 16%.
How closely this pattern will be echoed by the rest of the world’s carriers, airports, and handlers remains to be seen, but for IATA to look at January’s results as meaningful in themselves, without any consideration of the impact of the New Year holiday, is odd indeed.
