December 2017: Strong demand, but slower growth

Although demand for air freight remained strong through November 2017, beginning in September 2017, the year-over-year rate of demand growth began to fall from the double-digit heights achieved in the first eight months of the year as the tougher comparisons of late 2016 began to kick in. This trend continued into December.

Early reports from some of the world’s major carriers and airports indicate that December 2017 was a solid month with overall demand growth worldwide likely to still hit mid-single digits.

We will have to wait until WorldACD and IATA report their conclusions in early February, but, as you can see in the chart at right and in the details below, demand growth in December appears to be down a few percentage points from November.

Of interest was the relatively flat performance of Air China Cargo and China Southern Airlines. Although international cargo traffic continued to grow compared to December 2016, both carriers reported notable drops in domestic cargo traffic. For more on China’s domestic air cargo market, see “China’s domestic cargo traffic rose only slightly in 2017”.

Asia-Pacific

Cathay Pacific Airways reported December cargo traffic up 9.2% y-o-y to 1.10 billion RTKs. For the full year 2017, Cathay’s cargo traffic was up 9.0% to 11.63 billion RTKs, significantly outpacing growth in capacity, which expanded by just 3.6% during the same period.

Discussing the results, Cathay’s Director Commercial and Cargo Ronald Lam said: “Cargo’s strong momentum continued well into December, with volumes growing well ahead of capacity. We were able to sustain a high load factor and high yield during the month. As a result, revenue efficiency gains were observed in all route groups. Not only did our home market of Hong Kong perform well, strong cargo feed from across the network enabled us to achieve an all-time weekly tonnage uplift record in the week ending 9 December. In terms of the nature of commodities carried, perishables were much in demand in the lead up to the festive season.”

Hong Kong International Airport reported its December cargo handle up 6.3% y-o-y to 462,000 tonnes, not as much of an increase as the airport reported in the first three quarters, and nearly consistent with November’s 6.9% increase. Export volumes and transshipments both increased by 8.0% y-o-y, outpacing the rate of growth for imports.

For 2017 through December, HKIA’s cargo handle was up 9.2% to 4.9 million tonnes. Adding in the 112,000 tonnes of mail processed last year brings the total for cargo and airmail above 5 million tonnes.

Beijing-based Air China reported December cargo traffic up 4.0% y-o-y, to 682.4 million RTKs, down from the 8.0% gain reported in November, which was already depressed from the 14% gains reported in September and October. International traffic was up strongly – 7.6% over December 2016 – to 521 million RTKs, but the total was dragged down by a 6.2% decline in domestic traffic to 149 million RTKs. For the year through December, Air China’s cargo traffic was up 8.0% to 7.55 billion RTKs.

Guangzhou-based China Southern Airlines reported December cargo and mail traffic up just under 1% y-o-y to 600 million RTKs. This represents a significant drop from the 11.6% increase reported in November.  International traffic growth remained strong in December, up 6.74% y-o-y to 451 million RTKs, while domestic traffic dropped 13.8% to 147 million RTKs. China Southern’s cargo traffic for the full year 2017 was up 12.6% to 7.00 billion RTKs.

Shanghai Pudong International Airport Cargo Terminal Co Ltd (Pactl, the biggest handler at Shanghai’s Pudong Airport) reported its December handle up 9.5% y-o-y to 173,000 tonnes – a slight drop from the 10.9% gain in November, but nonetheless an indication of continuing strong demand. For the full year, Pactl’s handle was up 12.2% to a record 1.87 million tonnes.

Singapore Airlines reported December cargo traffic up 4.3% y-o-y to 624 million RTKs. For the full year 2017, SIA Cargo’s traffic was up 4.9% to 6.88 billion RTKs. December load factors were highest on route regions Europe and West Asia/Africa for which load factors of 77.7pts and 72.pts were reported.

Taiwan-based China Airlines reported December cargo traffic up 8.1% y-o-y to 535 million RTKs, the sixteenth consecutive month of increased traffic after a long period of declining demand. And the carrier’s cargo revenue growth continues to outpace traffic, up 25.8% y-o-y in December. For the year 2017, CI’s cargo traffic was up 8.0% to 5.74 billion RTKs, and cargo revenue was up 21.5%. Cargo capacity, measured in AFTKs expanded at a lower rate, with an increase of 5.3%. Load factors for the year were 1.8pts higher over 2016.

Taiwan-based EVA Air reported December cargo traffic up slightly (.23%) y-o-y to 318 million RTKs, the carrier’s busiest month since August 2017. Cargo revenue during the month was 19.6% higher from December 2016. For the year 2017, EVA’s cargo traffic was up 3.6% to 3.69 billion RTKs, while cargo revenue rose 11.9%.

Europe & Middle East

Lufthansa reported Group cargo traffic up 5.8% y-o-y in December to 895 million RTKs, well under the previous month’s 9.4% growth. Traffic on the Asia-Pacific lane was up 8.4% to 407 million RTKs, but the total was dragged down as traffic on the trans-Atlantic lane grew just 2.9% to 388 million RTKs. The strongest growth for the month – a 13.9% increase – was in traffic to/from the Middle East/Africa region, but the growth is from a low baseline of 70 million RTKs. For the full year of 2017, Lufthansa Group’s cargo traffic was up 7.4% to 10.82 billion RTKs.

Air France-KLM Martinair reported December cargo traffic up 2.9% y-o-y to 756 million RTKs. Air France reported December traffic up 2.6% to 338 million RTKs, while KLM’s traffic increased 3.1% to 418 million RTKs. For the full year, AF-KLM’s cargo traffic was up 1.8% to 8.60 billion RTKs.

International Airlines Group reported December cargo traffic up 0.8% y-o-y to 484 million RTKs. Subsidiary carrier British Airways reported December cargo traffic up 1.6% to 371 million RTKs, while Spain-based Iberia’s cargo traffic dropped 3.9% to 99 million RTKs. Ireland-based Aer Lingus reported December cargo traffic up 16.7% to 14million RTKs. For the year 2017, IAG’s cargo traffic was up 5.6% to 5.76 billion RTKs.

Turkish Airlines reported December cargo volume up 18.4% y-o-y to 102,000 tonnes. Turkish has reported the strongest year-over-year growth among major carriers for several years now, and while December’s 18.4% is one of its smallest year-over-year gains for 2017, it is still considerably larger than that reported by any of the other carriers. For the full year, Turkish Airlines reported cargo volume up 25.5% to 1.12 million tonnes.

Frankfurt Airport (FRA) reported its air cargo and mail handle down 3.6% y-o-y to 180,000 tonnes in December. For the year 2017, FRA’s handle was up 3.6% to 2.23 million tonnes.

Amsterdam’s Schiphol Airport reported its December cargo handle down 6.1% y-o-y to 140,000 tonnes, on the loss of full-freighter flights related to recently-imposed slot restrictions at the airport. The number of full-freighter flights in December 2017 was 13.2% lower than during the same month in 2016 with a reduction of 200 freighter movements. For the year, Schiphol’s handle was up 5.4% to 1.75 million tonnes.

London’s Heathrow Airport (LHR) reported its December handle up 7.3% to 143,000 tonnes. For the year 2017, LHR’s handle was up 10.2%, to 1.69 million tonnes.

Americas

After two months of small year-over-year declines in air freight demand, Chile-headquartered LATAM Airlines Group returned to growth in December, with the carrier reporting cargo traffic up 1.8% y-o-y to 327 million RTKs. For the year 2017, LATAM’s cargo traffic was down 1.3% compared to 2016, at 3.42 billion RTKs. Available capacity was reduced by 7.1%, boosting load factors by 3.2pp.

United Airlines reported December cargo traffic up 16.5% y-o-y to 439 million RTKs, its twenty-first consecutive month of strong gains. During 2017, United’s cargo traffic was up 18.2% to 4.84 billion RTKs.

The turnaround plan at Delta Air Lines continues to pay off. The Atlanta-based carrier reported December cargo traffic up 5.9% y-o-y to 255 million RTKs – its ninth consecutive monthly y-o-y gain after years of declining demand. This brings Delta’s cargo total cargo traffic for the year to 3.14 billion RTKs, up 8.6% over 2016.

Those interested in learning more about where air freight demand is headed in 2018 are invited to join us at Cargo Facts Asia where a round table panel will look at emerging trends in the air cargo market. The event will be held 23-25 April at the Mandarin Oriental Pudong in Shanghai. For more information, or to register, visit www.cargofactsasia.com