Air cargo continues upward trajectory in August

Now that many of the world’s major cargo carriers and airports have reported their August results, it seems that June was indeed the turning point for 2016 cargo traffic. For the third consecutive month, most airports and carriers are showing growth – even Taiwan-based EVA airways seems to have turned the corner from its contractionary past. One unexpected exception however, is Guangzhou-based China Southern Airlines, which posted a 6% monthly drop in August 2016. Since 2012 China Southern has often outperformed other carriers based in the region, but not this month.

LATAM, Delta Air Lines and Air France-KLM meanwhile, continue to post steep declines in cargo traffic. Otherwise, most other carriers and airports posted decent results for the month of August.

If these early results are an indication, worldwide cargo traffic in August will be up by a low-single-digit percentage over August 2015 – perhaps not as big a gain as we saw in July, but still on a growth trajectory. More interesting is the outlook for the remainder of the year. Will the collapse of container shipping line Hanjin (and the stranding at sea of tens of thousands of containers) force a shift of some sea freight to air? So far the impact has been minimal, but that could change. And will the slew of new product launches, from cellphones, to virtual reality goggles, drive a strong peak season? It is too early to tell, but what we can say is that the increase in air freight demand that started in June has clearly persisted through August.

Now for the details…

Asia Pacific

Cathay Pacific Airways reported August cargo traffic up 1.7% y-o-y to 876 million RTKs, continuing the sharp upswing that began in June after five months of declining demand. Discussing the August results, Cathay’s General Manager Cargo Sales & Marketing Mark Sutch said: “Overall cargo demand in August was reasonably robust and tonnage continued to stabilize. Freighters on our North American routes were generally full. We now see the momentum for exports out of Hong Kong and Mainland China building. As expected, the yields are gradually improving although there remains a gap when compared with the same period last year. We are planning to operate our maximum freighter schedule over the coming peak to match with the forecast demand from various new product launches.” For the first eight months of this year, Cathay’s cargo traffic was down 0.7% to 6.80 billion RTKs. If indeed Cathay is to experience peak season demand, we might expect to see overall growth against annual comparisons by the end of 2016.

Guangzhou-based China Southern Airlines reported August traffic down 6% y-o-y to 478 million RTKs, somewhat of an anomaly for the carrier which has seen only six monthly declines in the last four years. International traffic led the decline with a 12% drop compared to August 2015 – domestic traffic meanwhile grew 9.4% to 145 million RTKs. Possible explanations for the fall in international traffic include disruptions from the G20 summit which was expected to have a notable impact on fashion-related exports moving out of eastern China. For the first seven months of 2016, China Southern’s cargo traffic was up 9.7% to 3.89 billion RTKs.

Shanghai-based China Eastern Airlines reported August cargo traffic up 4.1% y-o-y to 391 million RTKs – its third positive result this year following July’s 9.7% increase. International traffic was up 6.8% to 304 million RTKs while the smaller domestic traffic fell 2.8% for the month, to 77 million RTK. For the first eight months of 2016, China Eastern’s cargo traffic was down 2.0% to 3.16 billion RTKs.

Shanghai Pudong International Airport Cargo Terminal Co Ltd (Pactl, the biggest handler at Shanghai’s Pudong Airport) reported a 2.7% y-o-y increase in its August cargo handle to 137,000 tonnes. This is the sixth 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 eight months of 2016 to 1,057,000 tonnes, up 2.1% over 2015.  International cargo in August was up 2.9% from August 2015 at 129,000 tonnes, while the much smaller domestic handle was flat at 8.000 tonnes (most of Shanghai’s domestic cargo moves through nearby Hongqiao Airport).

Taiwan-based EVA Air reported August cargo traffic up 2.4% y-o-y to 306 million RTKs, its third positive result in seventeen months. It seems like cargo traffic for EVA, which has long been in decline, may be returning to growth after reaching a new equilibrium.  For the first eight months of 2016, EVA’s cargo traffic was down 6.7% to 2.47 billion RTKs.

Europe & Middle East

Lufthansa started to show signs of recovery with a return to growth after two quarters of declining demand for cargo when it reported August Group cargo traffic up 0.7% y-o-y to 819 million RTKs on the back of a 1.6% y-o-y gain in July. Most notably, traffic to/from the Asia-Pacific region grew the most, up 4.3% to 382 million RTKs.  Traffic with an origin or destination in Europe also grew, albeit a bit slower, up 1.6% to 29 million RTKs. America meanwhile, was down 1.7% to 348 million RTKs, while the Middle East/Africa continued to be a sore spot with traffic down 6.0%. For the first eight months of this year, Lufthansa’s cargo traffic was still in the red, down 1.5% to 6.5 billion RTKs, but things are improving.

Air France-KLM continued its two-year trend of declines, reporting August cargo traffic down 7.7% to 702 million RTKs. For the year through August, AF-KLM’s cargo traffic was down 7.4% to 5.52 billion RTKs. KLM showed the most significant drop in cargo traffic which was down 10.4% in August to 412 million RTKs, and 10.5% year-to-date.

International Airlines Group reported strong demand for cargo in August with traffic up 3.3% y-o-y to 437 million RTKs. Year-to-date IAG’s cargo traffic was up 2.5% to 3.5 billion RTKs. IAG Group Airline, British Airways showed the most significant growth in August with traffic up 3.6% to 345 million RTKs, marking an improvement after a slow start to the year.

Turkish Airlines reported August cargo volume up 25.9% y-o-y to 79,000 tonnes. For the first eight months of 2016, Turkish’s cargo volume was up 18.4% to 559,000 tonnes. Between August 2015 and 2016 Turkish increased the number of aircraft in its fleet from 294, to 335. The carrier’s widebody fleet grew from 69 to 86, while its cargo fleet remained consistent at 10 aircraft.

Frankfurt Airport (FRA) reported its August cargo handle flat at 169,000 tonnes compared to the same period during 2015. For the first eight months of 2016, FRA’s handle was up slightly (0.5%) to 1.32 billion tonnes.

Amsterdam’s Schiphol Airport reported its August handle up 1.3% to 136,000 tonnes. For 2016 through August, AMS’ handle was up 1.6% to 1,073,000 tonnes.

London’s Heathrow Airport (LHR) reported its August handle flat over August 2015 at 123,000 tonnes. Year-to-date, LHR’s handle was up 1.7% to 1,000,000 tonnes.

Americas

Cargo traffic continued to fall steeply at Chile-headquartered LATAM Airlines Group, which reported August traffic down 9.3% y-o-y to 272 million RTKs. For the first eight months of 2016, LATAM’s cargo traffic was down 11.0% to 2.22 billion RTKs.

United Airlines reported August cargo traffic up 8.8% y-o-y to 337 million RTKs, its fifth consecutive month of positive results after a shaky start to the year. For 2016 through August, United’s cargo traffic was up 2.7% to 2.58 billion RTKs.

American Airlines Group reported August cargo traffic up 1.5% y-o-y to 282 million RTKs. For the first eight months of 2016, American’s cargo traffic was up 1.2% to 2.26 billion RTKs. Interested in learning more about American Airlines Cargo?  We encourage you to join us at the Cargo Facts Symposium in Miami, 10 – 12 October, where Jim W. Butler, president of American Airlines Cargo will speak on a panel discussion dedicated to the future of air freight. To register, or for more information, go to CargoFactsSymposium.com.

Delta Air Lines reported August cargo traffic down 12.8% y-o-y to 238 million RTKs. For the year through August, Delta’s cargo traffic was down 11.5% to 1.90 billion RTKs. The drop came as no surprise as Delta has been reporting high-single, to low-double digit growth for most of the year. Cargo was likely impacted by the carrier’s system-wide computer outage which cancelled hundreds of flights in early August.