Mixed results in January

2014 was a good year for the airfreight industry, the first in a long time, but will the growth continue?

With January data now in from many of the world’s big cargo carriers and airports, we can say “So far, so good.” Or maybe “So far, not too bad.” As shown in the chart at right, the results were mixed, with some carriers and airports seeing solid growth in air freight demand, while others reported declines. We expect that when IATA, WorldACD, and the Airports Council International publish their analyses of the first month of 2015, we will see a continuation of the modest growth of 2014. Perhaps a little higher, but any increase comes with the caveat that the timing of the Chinese New Year holiday renders year-over-year comparisons suspect for the individual months of January and February — that the true picture will not emerge until we can see the year-to-date results at the end of February.

Turning to the individual results:

Asia Pacific

Cathay Pacific Airways reported January cargo traffic up 14.1.0% y-o-y to 859 million RTKs. This is the eleventh consecutive month in which Cathay has reported year-over-year jumps of between 13% and 21%, after a flat start to 2014, and it appears that demand has remained strong in early February. Commenting on the December performance, Cathay Pacific General Manager Cargo Sales & Marketing Mark Sutch said: “Demand fell away, as expected, after the very busy end to 2014, but the markets remained relatively buoyant, particularly on the North American lanes. Traffic out of the key Hong Kong and Mainland China markets was much stronger than in the same month last year. We saw a pick-up in demand as January progressed and by the end of the month we were operating close to a full freighter schedule. We expect to see something of a mini-rush before the Chinese New Year holidays begin.”

Hong Kong International Airport reported cargo volume in January up 1.6% y-o-y to 356,000 tonnes. Import volume was up 9.2% to 135,000 tonnes, however a 2.5% decline in exports to 221,000 tonnes dragged down the total.. Commenting on the December results, HKIA said: “The growth in cargo throughput last month was driven by imports and transshipments, which were up 10% and 7%, respectively, from a year ago.  During the month, cargo throughput to/from North America and Southeast Asia increased most significantly compared to other key regions.”

Beijing-based Air China reported that its January cargo traffic jumped 26.2% y-o-y to 515 million RTKs. The carrier had been reporting steady, but unspectacular, growth through August, but beginning in September, and in every month since, Air China Cargo has reported year-over-year increases of more than 20%. January’s growth was driven by a 36.3% jump in international traffic to 374 million RTKs. Domestic traffic was up 4.3% to 130 million RTKs.

Guangzhou-based China Southern Airlines followed a strong performance in 2014 with a disappointing January, reporting cargo traffic down 3.9% y-o-y to 434 million RTKs. International traffic was down 1.5% to 289 million RTKs, while domestic traffic fell 8.4% to 143 million RTKs.

Shanghai-based China Eastern Airlines, unlike its unlike its competitors, struggled through much of 2014, and that struggle continues in January, with the carrier reporting cargo traffic down 2.9% y-o-y to 411 million RTKs. Given that Pactl, the biggest handler at China Eastern’s Shanghai hub reported double-digit growth in January (see below), it is clear that China Eastern is losing market share. International traffic for the month was down 1.3% to 327 million RTKs, and domestic traffic fell 8.6% to 74 million RTKs.

Shanghai Pudong International Airport Cargo Terminals Co. Ltd (Pactl, the biggest cargo handler at PVG) reported its January handle up 12.9% to 125,000 tonnes, continuing Pactl’s pattern of strong growth in 2014. For January, Pactl’s international volume was up 13.9% to 116,000 tonnes, while the much smaller domestic volume was up 1.8% to 9,000 tonnes (most of Shanghai’s domestic cargo moves through nearby Hongqiao Airport). However, given that the Chinese New Year holiday falls in February this year, we expect Pactl to report lower growth next month.

Europe & Middle East

Lufthansa Cargo reported January traffic down 2.3% y-o-y to 593 million RTKs. For the Lufthansa Group as a whole, January cargo traffic was down 2.2% to 713 million RTKs. On a regional basis, Group cargo traffic was up 3.5% to 321 million RTKs on the trans-Atlantic lane, and up 4.9% to 65 million RTKs onthe Middle East/Africa lane, but these gains were not enough to offset an 8.4% drop in cargo traffic on the Asia-Pacific lane to 300 million RTKs.

Air France-KLM continued to report significant declines in cargo traffic, with January down 8.0% % y-o-y to 713 million RTKs. The carrier’s cargo capacity was down slightly (1.7%) but nowhere near enough to explain the drop in traffic.

International Airlines Group reported January cargo traffic down 5.8% y‑o‑y to 407 million RTKs. The results were similar for IAG’s two subsidiary carriers, with a 5.4% drop in cargo traffic at British Airways to 334 million RTKs, and a somewhat steeper 7.6% decline at Iberia to 73 million RTKs

Turkish Airlines ended a multi-year run of exceptional results, reporting January cargo volume down 1.4% to 47,000 tonnes. For several years, Turkish has reported year-over years gains averaging about 20%. Obviously, that kind of growth is only possible off a small base, and cannot continue forever, so it has to see Turkish’s growth numbers fall to low double digits in recent months was expected, but the drop into negative territory comes as something of a surprise.

Etihad Airways reported November cargo volume up 7.20% y-o-y to 144,000 tonnes, an all time monthly record. For the first eleven months of 2014, Etihad’s cargo volume was up 17.0% to 518,000 tonnes. Worth noting is that the gains in volume do not appear to be coming at the expense of yield, as Etihad has consistently reported cargo revenue growth on par with, or greater than, the growth in volume. Looking ahead, the carrier said it expected total cargo volume for 2014 of more than 570,000 tonnes, a 17% increase on 2013.

Abu Dhabi International Airport (AUH) reported its first-quarter cargo handle up 15.8% over 1Q13 to 183,000 tonnes.

Frankfurt Airport (FRA) reported its January cargo handle down 0.8% to 160,000 tonnes. Airport operator Fraport said the decline was the result of the timing of the Chinese New Year holiday, but this seems unlikely, as the holiday falls in February this year as opposed to January last year. A more likely explanation is the impact of the ongoing labor dispute at Lufthansa, by far the biggest cargo carrier at FRA.

London’s Heathrow Airport (LHR) reported its January handle up 3.3% y-o-y to 116,000 tonnes, not quite as strong a result as the 5% to 6% growth reported through most of 2014.

Amsterdam’s Schiphol Airport reported its January handle down 2.3% to 120,000 tonnes.

Americas

LATAM Airlines Group reported January cargo traffic down 8.1% y-o-y to 8.1 million RTKs – similar to the 7.6% drop in December, and a significantly bigger fall than the low-single-digit declines the carrier reported for much of 2014. Commenting on the result, the company said the cargo traffic decrease was driven by weaker demand for imports into Latin America. LATAM also noted that cargo capacity was down 3.0%, “as a result of reduced freighter operation.”

United Airlines reported January cargo traffic up 11.2% to 293 million RTKs. This marks the fifteenth month of a turnaround that started in November 2013. Prior to that point, United had for some time been reporting what may have been the worst results for any major cargo carrier in the world. Since then the change has been remarkable, with 2014 full year traffic up 12.4% over 2013, and the trend now continuing into 2015.

American Airlines Group reported January cargo traffic down 1.9% to 249 million RTKs. In April 2013, American reversed a period of declining traffic, and traffic continued to grow fairly strongly through October 2014. This ended in a slight decline in November, resumed with a modest gain in December, and now has turned negative again.

Following a slight decline in November, the December gain sees American return to a pattern of growth that began in April 2013. For the full year, American’s cargo traffic was up 6.4% to 3.41 billion RTKs.

Delta Air Lines reported January cargo traffic up 3.1% y-o-y to 252 million RTKs. For the full year,