Although this was the first month since before the summer when demand growth dipped below 10%, it was not completely unexpected. Looking back at 2016, air freight demand growth was negative at the beginning of the year, turning positive in April, with low single-digit year-over-year gains through August. But in September, growth began to accelerate, up 6.1% in that month, and then up 8.2%, 6.8%, and 9.8% in October, November, and December, respectively. This of course meant that annual comparisons would inevitably become increasingly difficult beginning in September 2017, a trend which will likely continue.
Still, growth of 9% in September is great news; year-over-year gains have now been above 5% for thirteen consecutive months. Aside from the strong results in September 2016, WorldACD offered a few other plausible explanations for why growth was a bit slower in September:
- In 2017, the month of September had “less of the traditionally strong cargo days” than compared to the same month in 2016.
- The hurricanes had a notable influence on North American volumes, particularly in the Atlantic South, and Caribbean. As a result, volumes from the origin North America grew at only 5.6% y-o-y, in September, well-below the industry average.
These influences suggest that the industry has not necessarily “passed a cyclical growth peak” as IATA indicated in its monthly analysis, but rather that double-digit year-over-year growth may be coming to an end. However, strong demand and healthy yields will likely continue despite the tougher y-o-y comparisons.
Speaking of yields, WorldACD reported dollar yields rose 12% y-o-y in September, as USD revenues grew 21.8%. Much of this gain was erased by higher fuel prices, which rose 13% during the same period, but even so, yields have improved.
So, as we proceed through the last three months of 2017, the year-over-year comparisons will be increasingly tough, and even if demand continues to be strong, the y-o-y percentage gains will be smaller.
October data will begin to show up in the next few days, and while we don’t expect to see a huge drop-off in year-over-year growth, we do expect to see the continuation of a gradual decline. And then, by year-end and early 2018, the year-over-year data will be more indicative of long-term growth patterns.