May air freight demand — little change from 2012

Most of the world’s major cargo carriers, handlers and airports have now reported their May cargo traffic, and insofar as there is an identifiable trend, it is one of continued stagnation. The chart at left gives a snapshot of the May results, while details of the performance of individual companies are provided below.

Anecdotal evidence indicates that the big carriers based in the Middle East and Turkey are continuing to experience strong growth in cargo traffic. Assuming this is the case, we expect that overall demand for air freight in May will be slightly up compared to May 2012. but that that carriers in Europe and Russia are continuing to lose market share.

Asia Pacific

Hong Kong Air Cargo Terminals (Hactl) reported its May handle down 0.2% y-o-y to 231,000 tonnes. Export volume was up 0.1% to 122,000 tonnes, import volume was down 1.3% to 55,000 tonnes, and transshipment volume (which now exceeds imports), was down 0.1% to 53,000 tonnes. While it appears that Hactl’s y-o-y tonnage growth is declining as the year progresses, it is important to note that Hactl’s biggest customer (Cathay Pacific) opened its own cargo terminal at HKG in February, and will gradually migrate all of its cargo (including cargo carried by subsidiary Dragonair) away from Hactl. The impact was relatively small through the first quarter, but from April onward it will steadily increase. For the first five months of 2013, Hactl’s handle was up 1.7% to 1.1 million tonnes.

Cathay Pacific Airways reported May cargo traffic down 2.0% y-o-y to 679 million RTKs, continuing the trend of smaller declines as the year progresses. For the year to date through May, Cathay’s cargo traffic was down 4.7% to 3.42 billion RTKs.In discussing the May result, Cathay Pacific General Manager Cargo Sales & Marketing James Woodrow said: There was no change in the overall situation in the world’s major airfreight markets in May. Demand out of our two main markets, Hong Kong and Mainland China, remained well below expectations, particularly on the European trade lanes, so we continued to pare back our freighter schedule accordingly. Demand to North America was more robust. Return volumes on transpacific flights were helped by the beginning of the cherry season out of California. We continued to upgrade our fleet, taking delivery of our ninth Boeing 747-8 Freighter in May and parking a Boeing Converted Freighter.”

Shanghai-based China Eastern Airlines reported May cargo traffic up 5.0% y-o-y to 415 million RTKs as both international traffic increased 6.3% to 327 million RTKs. Domestic traffic was flat at 77 million RTKs, while the much smaller regional traffic (Hong Kong and Macau) was up 3.1% to 10 million RTKs. For the year through May, China Eastern’s cargo traffic was almost flat with 2012, up just 0.8% to 1.88 billion RTKs.

Shanghai Pudong International Airport Cargo Terminals Co. Ltd (Pactl, the biggest cargo handler at PVG) reported its May handle up 1.1% y-o-y to 106,000 tonnes. International volume was down slightly (0.2%) to 100,000 tonnes, while the much smaller domestic volume jumped 20.0% to 8,000 tonnes (most of Shanghai’s domestic cargo moves through nearby Hongqiao Airport). For the first five months of 2013, Pactl’s handle was up 2.2% to 496,000 tonnes.

Beijing-based Air China reported May cargo traffic up 8.6% y-o-y to 440 million RTKs. International traffic was up 9.7% to 312 million RTKs, while domestic traffic rose 7.2% to 120 million RTKs. This continues Air China’s positive trend in 2013, with the carrier reporting cargo traffic for the first five months of the year up 5.2% to 1.93 billion RTKs.

Guangzhou-based China Southern Airlines was the odd man out among the big three Chinese carriers, the only one of the three to see cargo traffic decline in May. For the month, China Southern reported cargo traffic down 1.4% y-o-y to 339 million RTKs. International traffic was down 2.1% to 219 million RTKs, while domestic traffic rose 0.4% to 119 million RTKs. For the year through May China Southern’s cargo traffic was up 3.9% to 1.67 billion RTKs.

Europe & Middle East

Lufthansa Cargo reported its May traffic down 0.8% y-o-y to 741 million RTKs. While this is still down on a year-over-year basis, it carries on the recent trend of less-bad results for the German carrier. For the Lufthansa Group as a whole, May cargo traffic was down 0.6% to 868 million RTKs. On a regional basis, May cargo traffic was up 1.8% on the trans-Atlantic lane, but down 3.0% on the Asia-Europe land and down 0.6% to/from the Middle East and Africa. For the first five months of 2013, Lufthansa Cargo’s traffic was down 3.7% to 3.47 billion RTKs, while Group cargo traffic was down 2.9% to 4.06 billion RTKs.

Air France-KLM continued to report declining cargo traffic, with May traffic down 6.4% y-o-y to 842 million RTKs. A slight gain (0.4% to 345 million RTKs) on the trans-Atlantic lane was nowhere near enough to offset the big drop on the Europe-Asia lane, where traffic was down 13.2% to 324 million RTKs. And not only was traffic down, AF-KLM said cargo yield also fell, although it did not provide details. For the first five months of 2013 AF-KLM’s cargo traffic was down 6.3% to 4.06 billion RTKs.

International Airlines Group (IAG, parent of British Airways and Iberia) reported May cargo traffic down 10.8% y-o-y to 461 million RTKs. Interestingly, while poor results at Iberia dragged down overall performance every month since the BA/Iberia merger through March of this year, in April and May BA reported a bigger drop than Iberia. In May, BA’s cargo traffic was down 11.3% to 376 million RTKs, while Iberia Cargo reported a drop of 8.0% to 86 million RTKs. For the five months of 2013 through May, IAG’s cargo traffic was down 8.4% to 2.29 billion RTKs.

Frankfurt Airport (FRA) reported its May freight handle down slightly (0.6%) y-o-y to 167,000 tonnes, continuing the recent trend of small gains and losses. For the first five months of this year, FRA’s handle was down 0.6% to 818,000 tonnes. Not only is this down from 2012, it is in fact 2% lower than FRA’s handle in the first five months of 2007 – six years ago.

London’s Heathrow Airport (LHR) reported its May handle down 4.3% y-o-y to 118,000 tonnes. For the first five months of 2013, LHR’s handle was down 3.8% to 578,000 tonnes.

Americas

LATAM Airlines Group (parent of LAN and TAM), reported April cargo traffic up 1.5% y-o-y to 366 million RTKs, with the increase “mainly driven by delayed seasonal demand.” LATAM said a 1.5% y-o-y increase in cargo capacity was the “result of increased availability in the belly of passenger aircraft partially offset by reduced freighter operations.” For the first five months of 2013, LATAM’s cargo traffic was up 2.3% to 1.87 billion RTKs.

United Airlines reported April cargo traffic down 8.3% y-o-y to 286 million RTKs. For the year through May, United’s cargo traffic was down 11.6% to 1.36 billion RTKs.

Delta Air Lines reported April cargo traffic down 5.9% y-o-y to 283 million RTKs. For the first five months of the year, Delta’s cargo traffic was down 2.6% to 1.38 billion RTKs.

American Airlines reported May cargo traffic up 4.1% y-o-y to 236 million RTKs. For the first five months of 2013, American’s cargo traffic was down 4.4% to 1.05 billion RTKs.