Air freight demand on the upswing?

Many of the world’s major cargo carriers and airports have now published their April operational results, and, at least at first glance, the news is good. Particularly in Europe, where Lufthansa and Air France-KLM both reported positive year-over-year growth in air freight demand.

However, before uncorking the Champagne, it is worth remembering that April 2015 was the first month of that year in which modal shift from ocean to air was not a factor. The backlogs at the US West Coast ocean ports had been cleared, and air freight demand on the trans-Pacific had returned to normal – resulting in an easier y-o-y comparison for April 2016.

But, even with the easier comparison, the results from most of the carriers and airports indicate increasing demand for air freight, and we expect that when IATA and WorldACD publish their comprehensive April data in two weeks we will see them both reporting modest growth.

Now for the details…

Asia Pacific

Cathay Pacific Airways reported March cargo traffic up slightly (0.6%) y-o-y to 854 million RTKs. This follows declines in the first three months of this year, and brings the carrier’s cargo traffic for the year through April to 3.28 billion RTKs, down 3.4% compared to the same period in 2015. Commenting on the April results, Cathay Pacific General Manager Cargo Sales & Marketing Mark Sutch said: “April saw a better-than-expected performance for our cargo business, at least in terms of tonnage. We managed capacity astutely and were able to capture shipments out of key markets, including Mainland China and India, which led to a small improvement in load factor. India remains a focus for our cargo business at the moment and we operated a number of additional services to and from the country in April in response to strong demand. The big issue at the moment is yield, which remains under intense pressure due to the overall softness of the markets and the big increase in competitor capacity.”

Hong Kong International Airport reported cargo volume in April up 1.2% y-o-y to 365,000 tonnes. Import volume was up 2.5% to 132,000 tonnes, while export volume rose 0.5% to 233,000 tonnes This is a continuation of the improvement over the combined January/February decline of 6.1% that started in March, but still leaves HKG’s handle for the first four months of 2016 down 2.3% to 1.35 million tonnes. Commenting on the April results, HKIA said: “The growth in cargo throughput was mainly attributed to a 10% year-on-year growth in transshipments. Traffic to / from key trading regions in Europe and Mainland China increased most significantly in the month.”

Beijing-based Air China reported its April cargo traffic up 6.9% y-o-y to 583 million RTKs. The gain was driven by a 7.8% jump in International traffic to 440 million RTKs, while domestic traffic grew 4.7% to 134 million RTKs. The much smaller regional traffic was down 2.5% to 10 million RTKs. For the four months of 2016 Air China’s cargo traffic was up 5.0% to 2.14 billion RTKs.

Guangzhou-based China Southern Airlines reported April cargo traffic up 12.7% y-o-y to 520 million RTKs, continuing the pattern of solid growth it has been reporting for several years. The April increase came on the back of 17.6% y-o-y growth in international traffic to 377 million RTKs, while domestic traffic was up just 1.7% to 141 million RTKs. For the 2016 through April, China Southern’s cargo traffic was up 13.3% to 1.88 billion RTKs.

Shanghai-based China Eastern Airlines, continues to underperform its Chines rivals, reporting April cargo traffic down 2.4% y-o-y to 396 million RTKs. International traffic was down 2.3% to 311 million RTKs while the smaller domestic traffic was down 3.0% for the month to 75 million RTK. For the first four months of 2016, China Eastern’s cargo traffic was down 6.5% to 1.51 billion RTKs.

Shanghai Pudong International Airport Cargo Terminal Co Ltd (Pactl, the biggest handler at Shanghai’s Pudong Airport) reported a 3.3% y-o-y increase in its April cargo handle to 139,000 tonnes. This is the second 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 four months of 2016 to 507,000 tonnes, up 2.0% over 1Q15.  International cargo in April was up 4.3% to 130,000 tonnes, while the much smaller domestic handle dropped 9.6% to 9.000 tonnes (most of Shanghai’s domestic cargo moves through nearby Hongqiao Airport).

Taiwan-based China Airlines reported April cargo traffic down 1.0% y-o-y to 460 million RTKs, a considerable improvement over the much steeper declines the carrier has been reporting for some time. For the year through April, CAL’s cargo traffic was down 9.9% to 1.64 billion RTKs.

Taiwan-based EVA Air reported April cargo traffic down 5.3%% y-o-y to 294 million RTKs. While this may not seem a very good result, we point out that it is a considerable improvement on the double-digit declines EVA has been reporting for the past twelve months. For the first four months of 2016, EVA’s cargo traffic was down 13.6% to 1.01 billion RTKs.

Europe & Middle East

Lufthansa reversed its recent trend of declines, reporting Group cargo traffic in April up 2.5% to 842 million RTKs. However, even with this relatively good performance in April, Lufthansa’s Group cargo traffic for the first four months of 2016 was down 4.0% to 3.11 billion RTKs. The April gain was driven by strong demand growth on the Asia-Europe trade lane, where cargo traffic was up 7.8% to 383 million RTKs. Traffic on the trans-Atlantic lane was down 2.2% in April to 363 million RTKs, while traffic on the less busy Middle East/Africa lane was down 3.3% to 63 million RTKs.

Air France-KLM, like Lufthansa, reported positive growth in cargo demand in April, its first such result in over two years. The growth was slight – traffic was up just 0.9%, to 709 million RTKs, and still leaves the carrier’s cargo traffic for the first four months of this year down 7.5% to 2.74 billion RTKs.

International Airlines Group reported April cargo traffic down 0.4% y-o-y to 452 million RTKs. For 2016 through April, IAG’s cargo traffic was down 1.7% to 1.77 billion RTKs.

Turkish Airlines reported April cargo volume up 11.6% y-o-y to 66,000 tonnes, continuing its long-standing pattern of solid gains. For the four months of 2016, Turkish’s cargo volume was up 10.9% to 245,000 tonnes.

Frankfurt Airport (FRA) reported its April cargo handle up 5.0% to 182,000 tonnes. For the first four months of 2016, FRA’s handle was up slightly (0.5%) to 688 million tonnes.

Amsterdam’s Schiphol Airport reported its April handle up 6.8% to 138,000 tonnes. For 2016 through April, AMS’ handle was up 2.3% to 527,000 tonnes.

London’s Heathrow Airport (LHR) reported its April handle up 3.4% y-o-y to 127,000 tonnes. For the first four months of 2016, LHR’s handle was up 1.1% to 499,000 tonnes.

Americas

Cargo traffic continued to fall at Chile-headquartered LATAM Airlines Group, which reported April traffic down 13.9% y-o-y to 277 million RTKs. For the first four months of 2016, LATAM’s cargo traffic was down 10.8% to 1.15 billion RTKs.

United Airlines reported April cargo traffic up 4.5% y-o-y to 324 million RTKs. For 2016 through April, United’s cargo traffic was down 3.5% to 1.23 billion RTKs.

American Airlines Group reported April cargo traffic up 5.5% y-o-y to 296 million RTKs. For the first four months of this year, American’s cargo traffic was up very slightly (0.1%) to 1.09 billion RTKs.

Delta Air Lines reported April cargo traffic down 10.7% y-o-y to 233 million RTKs. For the year through April, Delta’s cargo traffic was down 12.6% to 926 million RTKs.