Enough of the world’s major cargo carriers and handlers have now reported their first-quarter results that we should be able to get a feel for demand trends. This would be welcome, because the significant impacts of the labor problems at the US West Coast ports, the huge automobile recall in the US, and the timing of the Lunar New Year Holiday in Asia obscured whatever trend underlay results in the first two months of the year.
But do the numbers in the chart at right (and in the detailed analysis below) really tell us anything?
We will update the chart as more results become available, but at first glance, the only “trends” that jump out from the data we have now are that the big three Western European carriers are continuing to see their cargo traffic decline, and that Asian carriers didn’t have a very good March. But March results in themselves do not constitute a trend, and may be influenced by shippers rushing to get as much as possible in the air in February, when they realized that their ocean shipments were not going to be unloaded in time.
A look at the right-hand column indicates that, overall, the first quarter of 2015 was a very good one for air freight demand. But how much of the growth is attributable to underlying trends rather than the one-time gains from the problems in the US and the timing of the holiday will probably not be clear for at least another month.
Now for the details…
After seeing very strong demand growth in the first two months of 2015, Guangzhou-based China Southern Airlines reported March cargo traffic down 3.3%, to 428 million RTKs. Interestingly, domestic traffic continued grow, up 3.5% to 141 million RTKs, but the total was dragged down by a 6.5% decline in international traffic to 286 million RTKs. For the first quarter, China Southern’s cargo traffic was up 13.6% to 1.20 billion RTKs.
Taiwan-based EVA Air reported March cargo traffic down 8.7% y-o-y to 348 million RTKs. While this is a significant drop, we point out that EVA is in the process of downsizing its freighter fleet, and cargo capacity was down over 12% from March 2014, and therefore load factor rose 3.4 percentage points to a very respectable 90.1%. And despite the drop in traffic, EVA’s cargo revenue was effectively flat with March 2014, boosting cargo yield by 9.3%. For the first quarter, EVA’s cargo traffic was down 1.1% to 950 million RTKs, but again, this was against a backdrop of reduced capacity, and both cargo revenue and cargo yield were up (4.0% and 5.1%, respectively).
Taiwan-based China Airlines (CAL) reported March cargo traffic down 2.0% y-o-y to 493 million RTKs, but, as is the case with EVA Air (above), capacity fell more than traffic, and both cargo revenue and cargo load factor rose in the month. For the first quarter of 2015, CAL’s cargo traffic was up 11.6% to 1.36 billion RTKs.
In the first two months of 2015 Shanghai-based China Eastern Airlines reversed its 2014 trend of declining cargo traffic, reporting combined January/February traffic up 16.0% y-o-y to 782 million RTKs. The good times stopped rolling in March, with cargo traffic down 3.4% to 432 million RTKs, but overall, the first quarter was a strong one with cargo traffic for the three months up 8.2% over 1Q14 to 1.21 billion RTKs. International traffic for the quarter was up 11.2% to 973 million RTKs, while domestic traffic was down 3.2% to 211 million RTKs.
Shanghai Pudong International Airport Cargo Terminals Co. Ltd (Pactl, the biggest cargo handler at PVG): After reporting its combined January/February handle up 19.8% y-o-y, Pactl dropped back to earth, reporting its March handle up just 2.3% y-o-y to 133,000 tonnes. For the first quarter of 2015, Pactl’s handle was up 12.7%. Given that Pactl is the first major Asian handler to report March results, it is hard to know what to make of the 2.3% year-over-year gain. In theory, the timing of the Lunar New Year holiday should not have much, if any, impact on March air freight demand. But there was still a significant backlog at the US West Coast ocean ports for at least the first half of March so, again in theory, trans-Pacific air cargo, especially ex-Asia, should have seen something of a boost. But a look inside Pactl’s 2.3% overall gain has us scratching our heads. Almost 95% of the cargo that moves through Pactl’s terminal is international, and in March, Pactl’s outbound international handle fell 7.3% y-o-y to 69,000 tonnes. The overall 2.3% gain was driven by a 17.5% increase in inbound international cargo to 56,000 tonnes.
Europe & Middle East
Lufthansa Cargo reported March traffic down 6.0% y-o-y to 763 million RTKs. For the Lufthansa Group as a whole, March cargo traffic was down 4.8% y-o-y to 913 million RTKs. For the first quarter of 2015, Lufthansa Cargo reported traffic down 2.8% to 2.00 billion RTKs, while the Lufthansa Group’s cargo traffic was down 2.1% to 2.40 billion RTKs. On a regional basis, Group cargo traffic for the quarter was down on all three major trade lanes. The Asia-Pacific and Middle East lanes fared worst, with traffic down 3.1% and 3.2%, respectively, while traffic on the trans-Atlantic lane was down 0.5%.
Air France-KLM continued to report big declines in cargo traffic, with March down 8.7% y-o-y to 822 million RTKs. This follows drops of 8.0% in January and 8.2% in February, and leaves the carrier’s cargo traffic for the first quarter down 8.3% to 2.26 billion RTKs.
International Airlines Group reported March cargo traffic down 4.7% y-o-y to 485 million RTKs. Cargo traffic at subsidiary carrier Iberia was up 13.1%, but this strong performance was not enough to overcome an 8.2% decline at the much larger British Airways. For the first three months of 2015, IAG’s cargo traffic was down 3.8% to 829 million RTKs
Frankfurt Airport (FRA) reported its March cargo handle down 6.1% to 190,000 tonnes. For the first quarter of 2015, FRA’s handle was down 2.0% to 322 million tonnes.
London’s Heathrow Airport (LHR) reported its February handle up 2.9% y-o-y to 137,000 tonnes. For the first three months of 2015, LHR’s handle was up 4.5% to 355,000 tonnes.
Amsterdam’s Schiphol Airport reported its March cargo handle down 4.7% y-o-y to 136,000 tonnes. For the first quarter of 2015, AMS’ handle was up 1.8% to 386,000 tonnes.
Turkish Airlines reported March cargo volume up 4.7% y-o-y to 68,000 tonnes. While this is nowhere near the double-digit growth Turkish had been reporting through the end of 2014, it is an improvement on the slight decline reported in January/February. Obviously, the 25% to 35% gains of the past could not go on forever, but to see negative growth at the beginning of this year was surprising. For the first quarter of 2015, Turkish’s cargo volume was up 1.9% to 160,000 tonnes.
Cargo traffic continued to decline at Chile-headquartered LATAM Airlines Group, which reported March traffic down 10.8% y-o-y to 340 million RTKs. Cargo capacity for the month was down 2.9% as LATAM continued to reduce its freighter operations. The company said the decline in traffic “was driven by weaker imports into Latin America.” For the first quarter, LATAM’s cargo traffic was down 9.6% to 969 million RTKs.
United Airlines reported March cargo traffic up 8.1% to 350 million RTKs, continuing a period of strong growth that began in late 2013. For the first quarter of 2015, United’s cargo traffic was up 13.2% to 967 million RTKs.
American Airlines Group reported March cargo traffic down 3.0% to 301 million RTKs. For the first quarter of 2015, American’s cargo traffic was down 1.2% to 808 million RTKs.
Delta Air Lines reported March cargo traffic down 1.5% y-o-y to 289 million RTKs. For the first quarter of 2015, Delta’s cargo traffic was up 3.4% to 801 million RTKs.
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