A different look at January

Yesterday we examined IATA’s report on worldwide air cargo traffic in January, and concluded that there was limited value in an analysis that did not take into account the impact of the Lunar New Year holiday in Asia. Today we look at January from a different point of view – that of WorldACD, which bases its analysis not on traffic statistics submitted by carriers, but rather on chargeable weight and yield data gathered from airwaybills.

The first thing to note is that IATA’s report of a 3.2% year-over-year growth in air cargo traffic is exactly matched by WorldACD’s report of 3.2% growth in volume (chargeable weight). WorldACD, however, also reports change in cargo yield, and here the news was depressing, to say the least. Or was it? A year-over-year drop of almost 11% in yield (and a month-over-month decline of 8.5%) has to be bad, doesn’t it? Well, according to WorldACD, maybe not…

First, says WorldACD, almost two-thirds of the yield drop was caused by decreasing fuel surcharges. And since surcharges are, in theory at least, passed through, their is no bottom line impact to this part of the decline.

Second, virtually all currencies worldwide fell against the US dollar over the last year, which, yes, does hit the bottom line, but is not a reflection of a weakness in pricing power.

And third, January is historically a month in which yields fall so the month-over-month decline is to be expected.

Unlike IATA, WorldACD did not conclude that the air freight industry was off to a bad start in 2015, pointing out that in the comparison month – January 2014 – the recovery in demand was already underway, so the 3.2% y-o-y growth was, while not great, also not terrible.

Finally, like IATA, WorldACD did not discuss the impact of the New Year holiday, so, as we said yesterday, our view is that trying to read the future in the tea leaves of January is a futile exercise. When the February results are in, and we can eliminate the impact of the timing of the New Year holiday by looking at the two-month data, we will all be in a better position to gauge the start to 2015 and the prospects for the remainder of the year.