2017 – the view at the halfway point

Unlike sporting events, the air freight business doesn’t have a half-time break. Work goes on without a break – around the world, around the clock, around the year.

But the calendar says today is the last day of the first half of the year, so, even though business continues without a break, today is a good time to look back at the first half and ahead to the second.

All the more so because IATA has just released its Q2 2017 “Cargo Chartbook.” Which is, yes, page after page of charts, with commentary, analyzing the state of the industry in 2017 through the end of the first half. You can read the whole Chartbook on IATA’s website, but here are a few highlights.

First, as we and others have regularly reported, demand for air freight so far this year is increasing at close to a double-digit year-over-year pace, and IATA says that strong growth will continue. “Global economic conditions have improved since mid-2016, including on the consumer side. The trade backdrop has strengthened too, particularly in so-called emerging economies.” Looking ahead, IATA said: “The new export orders component of the global manufacturing PMI has slipped slightly since February, but remains consistent with year-on-year FTK growth of around 8% in Q3 2017.”

Of course, there is more to the air freight equation than demand, and IATA points out that capacity growth has not kept pace with demand. More than 5,200 tonnes of additional payload capacity were added to the fleet in H1 2017, mostly in the form of wide-body passenger belly capacity. That may sound like a lot, but it was 8% lower than the 5,700 tonnes of payload capacity added in H1 2016. This has had the effect of driving up yields, and IATA said: “A combination of rising cargo yields and recent falls in fuel prices is lowering the breakeven load factor. With achieved loads continuing to recover, and freighter utilization increasing, profit margins are widening.”

In sum, the year so far has been a terrific one for the air freight industry, and the outlook is very good for the remainder. But, while the benefits have been shared by most players, there are a few who are struggling. One of the most interesting charts in the Chartbook compared recent cargo performance for some of the world’s major airports. With only two exceptions, volume growth in May ranged from a solid-but-unspectacular 5.2% at Frankfurt (FRA) to a 13.0% jump at Shanghai Pudong (PVG). The two exceptions? Dubai (DXB) was up just 1.9%, while volume at neighboring Abu Dhabi (AUH) plummeted 14.4%!

That’s it for the first half of 2017. Join us at the Cargo Facts Symposium in October to see how the third quarter played out, and hear the thoughts of top industry executives about the future. For more information, or to register, visit www.cargofactssymposium.com