December – more of the same

Many of the world’s big cargo carriers and airports have reported their December and full-year cargo results and, while year-over-year demand growth appears to have returned (if only just), there is not much to get excited about.

For most of 2015, worldwide air cargo traffic has been close to flat with 2014. According to IATA, traffic for the first eleven months of 2015 was up 2.3% over the previous year, but that was almost entirely the result of the big boost in January and February when labor problems at the US West Coast ocean ports forced shippers to shift from sea to air. Take that boost out of the equation, and it is clear that underlying demand for air freight has not changed much from 2014.

Of course, that overall demand is flat does not mean no change for individual carriers, handlers, airports. Air China, China Southern Airlines, and Turkish Airlines, for example, all reported significant increases this year, while Air France-KLM, EVA Air, and LatAm all saw steep declines. But, in two weeks, when IATA and WorldACD publish their analyses of the December and full-year results, we expect to see very low single-digit growth for both the month and the year.

Now for the December details…

Asia Pacific

Cathay Pacific Airways reported December cargo traffic up 2.0% y-o-y to 952 million RTKs, returning to its two-year trend of demand growth after a brief flirtation with decline in November. For the full year 2015, Cathay’s cargo traffic was up 5.4% to 10.59 billion RTKs. Commenting on the November results, Cathay Pacific General Manager Cargo Sales & Marketing Mark Sutch said: “The seasonal peak for airfreight lasted until the week before Christmas and our performance in December, at least in terms of tonnage lifted, was marginally ahead of expectations. Demand on the transpacific and Indian routes remained robust. Unfortunately, the excess of capacity in the world’s air cargo markets made it difficult for carriers to get rates up to the kind of levels expected during the year-end peak. Overcapacity and pressure on yield will remain concerns for the industry moving into the New Year.”

Hong Kong International Airport reported cargo volume up 1.0% y-o-y in December to 391,000 tonnes. Export volume was up 0.9% to 248,000 tonnes, and import volume rose 1.1% to 143,000 tonnes. After beginning the year on a positive note – combined January/February volume was up 7.2% – HKIA saw year-over-year declines exceed gains for the rest of the year. However, with the small gain in December, the Airport came through 2015 with a very slight (0.1%) increase in its full-year handle to 4.38 million tonnes – a new record, if only just. Looking ahead to 2016, Airport Authority CEO Fred Lam said that while he expected growth of 4% to 6% in passenger volume in 2016, only “mild growth in cargo volume is expected due to global economic uncertainties.”

Beijing-based Air China reported December cargo traffic up 6.5% y-o-y to 588 million RTKs. This is not as spectacular as the double-digit (often more than 20%) y-o-y increases the carrier has been reporting since mid-2014, but that kind of growth cannot go on for long. The December growth was led by an 8.0% increase in international traffic to 436 million RTKs, while domestic traffic was up 3.2% to 143 million RTKs. Air China’s full-year 2015 cargo traffic was up 15.2% to 6.56 billion RTKs.

Guangzhou-based China Southern Airlines reported December cargo traffic up 14.0% y-o-y to 515 million RTKs, continuing the trend of generally strong growth the carrier has reported since late 2013. International traffic jumped 23.5% to 362 million RTKs, while domestic cargo traffic was down 3.4% to 151 million RTKs. For the full year, China Southern’s cargo traffic was up 12.0% to 5.66 billion RTKs.

Shanghai-based China Eastern Airlines reported November cargo traffic up 5.8% y-o-y to 448 million RTKs. International traffic for the month was up 4.2%% to 345 million RTKs, while domestic traffic jumped 12.6% to 92 million RTKs. China Eastern’s cargo traffic has followed no discernable pattern this year, ranging from significant growth to significant declines, leaving the carrier to report full-year traffic up 1.3% over 2014 to 4.86 billion RTKs.

Taiwan-based China Airlines (CAL) reported December cargo traffic down 4.7% y-o-y to 439 million RTKs. For the full year, CAL’s cargo traffic was up 1.3% to 5.38 billion RTKs.

Taiwan-based EVA Air reported December cargo traffic down 14.9% y-o-y to 289 million RTKs. For the full year, EVA’s cargo traffic was down 10.3% to 3.64 billion RTKs.

Shanghai Pudong International Airport Cargo Terminal Co (PACTL, the biggest cargo handler at Shanghai’s Pudong Airport (PVG)) reported its December handle up 3.0% to 137,000 tonnes, a record for the month. International volume was up 3.0% to 131,000 tonnes, while the much smaller domestic volume was up 3.5% to 10,000 tonnes. The December growth was at a slower pace than PACTL had been reporting for much of 2015, although a considerable improvement on November, when a government edict banning charter flights at PVG cut into the company’s peak season business. For the full year, PACTL’s handle was up 6.5% to 1.60 million tonnes, another record.

Singapore Airlines reported December cargo traffic up 8.9% y-o-y to 574 million RTKs. This follows a strong 5.4% increase in November, a 9.8% increase in October, and 4.4% increase in September, so it appears that SIA may finally have reversed a several-year trend of declining demand for its air freight services. For the full year 2015, SIA’[s cargo traffic was up 3.0% to 6.48 billion RTKs.

Europe & Middle East

Lufthansa Cargo reported December traffic down 3.9% y-o-y to 649 million RTKs. For the Lufthansa Group as a whole, December cargo traffic was down 4.4% to 780 million RTKs. Group cargo traffic was up 1.8% to 350 million RTKs on the Asia/Pacific trade lane, but this was nowhere near enough to counter a 9.3% drop on the trans-Atlantic lane to 335 million RTKs. On the less busy Middle East/Africa lanes traffic was down 8.5% to 66 million RTKs. While December can hardly be regarded as a successful month for Lufthansa’s cargo business, at least it was a huge improvement over strike-plagued November, during which the Lufthansa Group’s cargo traffic was down12.0% y-o-y. For the full year of 2015, Lufthansa’s Cargo traffic was down 2.9% to 8.36 billion RTKs. For the Lufthansa Group, cargo traffic was down 3.1% to 9.93 billion RTKs.

Air France-KLM continues to report significant falls in cargo traffic, with a 7.8% y-o-y drop in December to 749 million RTKs. While AF-KLM has been reporting dismal cargo results for some time, December was better than November, when the terrorist attack in Paris made the carrier’s already difficult cargo situation even worse. Commenting on the December result, Air France-KLM said it was continuing with the restructuring of its cargo operations, with full-freighter capacity down 29% y-o-y. But despite this, “unit revenue per available ton kilometer (RATK) ex-currency [was] clearly down compared to December 2014” For the full year, AF-KLM’s cargo traffic was down 8.5% to 9.01 billion RTKs.

International Airlines Group reported December cargo traffic down 1.3% y-o-y to 451 million RTKs (adjusted for the recent acquisition of Aer Lingus). Subsidiary carrier Iberia saw cargo traffic up 8.4% to 103 million RTKs, while IAG’s larger British Airways subsidiary reported traffic down 4.1% to 348 million RTKs. For the full year, IAG Cargo’s traffic was down 3.9% to 5.24 billion RTKs.

Turkish Airlines reported December cargo volume up 8.0% y-o-y to 64,000 tonnes, continuing the carrier’s long-standing trend of strong year-over-year increases in demand. (Note that Turkish mis-reported its October traffic as being down almost 13%, but later corrected that to a gain of 3.6%) For the full year 2015, Turkish’s cargo volume was up 8.4% to 720,000 tonnes.

Frankfurt Airport (FRA) reported its December cargo handle down slightly (-0.5%) y-o-y to 175,000 tonnes. For the full year, FRA’s handle was down 2.3% to 2.11 million tonnes.

London’s Heathrow Airport (LHR) reported its December handle up 0.8% y-o-y to 127,000 tonnes, continuing its year-long pattern of small gains and losses. For the full year 2015, LHR’s handle was almost flat with last year – down 0.2% to 1.50 million tonnes.

Amsterdam’s Schiphol Airport reported its December cargo handle up 1.1% y-o-y to 135,000 tonnes. For all of 2015, AMS’ handle was down 0.7% to 1.62 million tonnes.

Americas

Cargo traffic continued to fall steeply at Chile-headquartered LATAM Airlines Group, which reported December traffic down 11.2% y-o-y to 328 million RTKs. The company said cargo traffic continued to be “weak during the month of December especially in Brazil domestic and international markets. Additionally, weaker seasonal exports from Latin America contributed to the softness in demand.” As a result, the company added, “We continue to adjust cargo capacity through a reduced freighter operation, which resulted in a decline of 1.3% of cargo ATKs in December.” For the full year, LATAM’s cargo traffic was down 12.0% to 3.78 billion RTKs.

United Airlines reported December cargo traffic almost flat (down 0.2%) y-o-y at 327 million RTKs, its first negative result since a long period of growth began in late 2013. For the full year, United’s cargo traffic was up 5.1% to 3.82 billion RTKs.

American Airlines reported December cargo traffic down 1.5% to 284 million RTKs. For the full year 2015, American’s cargo traffic was down 0.8% at 3.38 billion RTKs.

Delta Air Lines reported December cargo traffic down 8.9% y-o-y to 249 million RTKs. For the full year, Delta’s cargo traffic was down7.1% to 3.20 billion RTKs.