Mixed messages in May

With the impact of the US West Coast ocean port crisis effectively over, May cargo statistics from the world’s major carriers and airports ought to provide a much clearer picture of the underlying trends in air freight demand for this year. Unfortunately, the messages are mixed, and we do not feel confident about making any definitive statements about industry trends.

Even within regions results are hard to interpret. On the whole, Asian carriers saw strong year-over-year growth in cargo traffic, with Air China Cargo continuing to lead the way, but there were certainly exceptions. In Europe, results varied from a 12% decline at Air France-KLM, to a 13% increase at Turkish Airlines. In the Americas, results were generally poor, although United Airlines did report modest growth.

Now for the details…

Asia Pacific

Cathay Pacific Airways reported May cargo traffic up 9.5% y-o-y to 873 million RTKs. This continues Cathay’s overall pattern of strong growth that began in March 2014, and leaves Cathay with cargo traffic up 12.2% to 4.27 billion RTKs for the first five months of this year. Commenting on the May results, Cathay Pacific General Manager Cargo Sales & Marketing Mark Sutch seemed almost apologetic that the growth wasn’t even stronger, saying: “Our cargo business got off to a slow start in May due to the long public holiday in Mainland China at the beginning of the month. Demand picked up steadily as factories reopened but the month’s tonnage growth could not keep pace with the increase in capacity. Our Mainland business continued to face pressure from intense competition and we saw less benefit from the congestion in the seaports on the West Coast of the USA than in previous months. Demand into and out of the Indian subcontinent was one of the bright spots in our cargo network in May.”

Hong Kong International Airport reported cargo volume in May down slightly (0.3%) y-o-y to 366,000 tonnes. Export volume was down 0.8% to 232,000 tonnes, while import volume rose 0.5% to 134,000 tonnes. Year-over-year changes in HKIA’s handle fluctuated dramatically in the first three months of this year, from an increase of 22.6% in February to a decline of 8.2% in March, but have stabilized with small declines in April and May. For the first five months of 2015 HKIA’s handle was up 1.5% to 1.75 million tonnes.

Beijing-based Air China reported May cargo traffic up strongly – 23.4% y-o-y to 568 million RTKs. This is Air China’s tenth consecutive month of double-digit cargo traffic growth, and makes Air China the undisputed leader, in terms of cargo traffic growth, among the big Asian carriers. The May growth was driven by a 30.4% increase in international traffic to 431 million RTKs, while domestic traffic rose 6.7% to 127 million RTKs. For the year through May, Air China’s cargo traffic was up 23.5% to 2.61 billion RTKs.

Guangzhou-based China Southern Airlines reported May cargo traffic up 6.7% y-o-y, to 457 million RTKs, with the gain coming on the back of a 9.0% increase in international traffic to 318 million RTKs. Domestic traffic for the month was up 1.9% to 138 million RTKs. For the first five months of 2015, China Southern’s cargo traffic was up 10.6% to 2.12 billion RTKs.

Shanghai-based China Eastern Airlines reported May cargo traffic up 7.1% y-o-y to 423 million RTKs, very much in line with its 7.6% growth to 2.04 Billi9n RTKs for the first five months of this year. China Eastern’s international cargo traffic in May was up 5.1% to 325 million RTKs, while domestic traffic jumped 16.6% to 87 million RTKs.

Taiwan-based EVA Air reported May cargo traffic down 11.4% y-o-y to 301 million RTKs. When looking at this decline, remember that EVA is in the process of downsizing its freighter fleet, and cargo capacity was down over 11% from May 2014, and therefore cargo load factor was almost flat with last year at 82.0%. For the year through May, EVA’s cargo traffic was down 3.8% to 1.26 billion RTKs.

Taiwan-based China Airlines (CAL) reported April cargo traffic up 1.7% y-o-y to 461 million RTKs. For the first five months of 2015, CAL’s cargo traffic was up 8.0% to 2.28 billion RTKs.

Shanghai Pudong International Airport Cargo Terminals Co. Ltd (Pactl, the biggest cargo handler at PVG): reported its May handle up 10,7% y-o-y to 135,000 tonnes. International volume was up 8.6% to 125,000 tonnes, while the much smaller domestic volume jumped 28.8% to 9,000 tonnes. For the year through April, Pactl’s handle was up 11.9% to 497,000 tonnes.

Singapore Airlines reported May cargo traffic down 1.0% y-o-y to 531 million RTKs. For the first five months of 2015, SIA’s cargo traffic was up 2.7% to 2.63 billion RTKs. The overall 2015 gain is a reversal of SIA’s long-term trend of single-digit declines, and it will be interesting to see if the carrier can continue to grow its cargo traffic over the remainder of the year or whether the slight decline in May marks a return to the pattern of past years.

Europe & Middle East

Lufthansa Cargo reported May traffic down 3.0% y-o-y to 720 million RTKs. For the Lufthansa Group as a whole, May cargo traffic was down 3.4% to 852 million RTKs. The decline came as a small (1.1%) gain on the trans-Atlantic lane could not compensate for a drop of 7.7% on the Asia-Pacific lane. The May decline follows a relatively strong performance in April, and leaves Lufthansa Cargo’s traffic for the first five months of 2015 almost flat (down 0.3%) with the same period in 2014 at 3.43 billion RTKs. For the Lufthansa Group, cargo traffic through May was down 0.4% to 4.09 billion RTKs.

Cargo woes continue at Air France-KLM, which reported May cargo traffic down 12.0% y-o-y to 741 million RTKs. This follows similar declines in the previous four months, and puts the carrier’s cargo traffic down 10.4% for the first five months of 2015. Air France-KLM is in the process of shrinking its freighter fleet, and said main-deck capacity was down 25% y-o-y in May. But total cargo capacity was down only 4.8%, so there is more involved here than just capacity reduction.

International Airlines Group reported May cargo traffic down 2.0% y-o-y to 437 million RTKs. A 5.1% gain in traffic at subsidiary carrier Iberia to 82 million RTKs, was not enough to compensate for a 3.5% drop at IAG’s larger British Airways subsidiary to 355 million RTKs in April. We note that April 2014 was the last month that BA’s fleet included three 747-8 freighters ACMI-leased from Atlas Air, so the May results are the first this year in which year-over-year comparisons can be made on a like-for-like basis. For the year through May, IAG Cargo’s traffic was down 2.6% to 2.19 billion RTKs.

Turkish Airlines reported May cargo volume up 12.6% y-o-y to 65,000 tonnes. This marks a considerable jump from the carrier’s trend of low-single-digit gains in the first four months of this year, although not to the level of the 20% to 35% gains of the last few years. Obviously, growth at that rate could not go on forever, but it will be interesting to see what happens to Turkish’s cargo volume as more A330-200Fs enter its fleet this year. For the first five months of 2015, Turkish’s cargo volume was up 4.8% to 218,000 tonnes.

Frankfurt Airport (FRA) reported its May cargo handle down 3.1% y-o-y to 180,000 tonnes. For 2015 through May, FRA’s handle was down 1.7% to 864,000 thousand tonnes.

London’s Heathrow Airport (LHR) reported its April handle down 0.7% y-o-y to 125,000 tonnes. For the first five months of 2015, LHR’s handle was up 3.0% to 619,000 tonnes.

Amsterdam’s Schiphol Airport reported its April cargo handle down 1.5% y-o-y to 138,000 tonnes. For the year through May, AMS’ handle was down 2.0% to 652,000 tonnes.

Americas

Cargo traffic continued its ever-steepening decline at Chile-headquartered LATAM Airlines Group, which reported May traffic down 16.6% y-o-y to 303 million RTKs. The company said cargo traffic in May “was impacted negatively by an eight day strike at the Customs Office in Santiago, which stopped cargo traffic in Chile during this period. In addition, cargo demand continues to be weak, especially in Brazil domestic and international markets.” For the first five months of 2015, LATAM’s cargo traffic was down 11.2% to 1.59 billion RTKs.

United Airlines reported May cargo traffic up 2.3% to 308 million RTKs, continuing a period of growth growth that began in late 2013. For the year through May, United’s cargo traffic was up 10.1% to 1.59 billion RTKs.

American Airlines Group reported May cargo traffic down 2.6% to 291 million RTKs. For the first five months of 2015, American’s cargo traffic was down 1.7% to 1.38 billion RTKs.

Delta Air Lines reported May cargo traffic down 8.1% y-o-y to 267 million RTKs. For the year through May, Delta’s cargo traffic was almost flat with 2014 at 1.33 billion RTKs.