July 2019 airfreight demand: summer slump persists

As airports and carriers begin to report their July 2019 cargo traffic results, airfreight demand – unsurprisingly – continues to respond negatively to increasing trade friction on the trans-Pacific trade lane, and elsewhere. Carriers from all regions almost unanimously reported moderate year-over-year declines. There is little change from June 2019, for which IATA reported a year-over-year decline of 3.4%. When IATA releases its July traffic report later this month, Cargo Facts expects total market declines of 3-4%. Looking at performance on a region-by-region basis... Asia-Pacific Cathay Pacific Group reported July traffic down 9.4% year-over-year to 952 million FTKs on tonnage that was 8.2% lower at 170,000 tonnes. Year-to-date, Cathay’s traffic is 6.6% lower compared to the first seven months of 2018. Commenting on the cargo performance, Ronald Lam, Chief Customer and Commercial Officer, blamed the lower performance on “continued headwinds” from softening markets across most major markets. According to Lam, South Asia was the only bright spot where tonnage increased on a month-to-month and year-over-year basis. Amid faltering trade Cathay will turn its focus to capacity control, and fortify its specialty cargo offerings. Singapore Airlines reported July cargo traffic down 5.7% y-o-y to 548 million FTKs, while cargo tonnage declined by 5.1% to just over 103,000 tonnes. Year-to-date, cargo traffic is down 5.6% to 3.8 billion FTKs. Air China Cargo ’s traffic for July was 4.0% lower than in July 2019 at 419 million FTKs. Overall tonnage increased slightly at 0.6% to about 120,000 tonnes. For the first seven months of 2019, traffic is down 2.5%, and tonnage is 1.3% lower than during the same period in 2018. China Southern ’s traffic for July was nearly flat y-o-y, with a slight decline of 0.5% to 643 million FTKs. Year-to-date, traffic is up by a slight 0.9% at 4.2 billion FTKs. Domestic traffic for the carrier was up 1.6% y-o-y, while international traffic decreased by 1.1%. China Airlines reported a 13.8% drop y-o-y to 451 million FTKs. These results for July continue the carrier’s six consecutive months of declines in traffic this year. Year-to-date, the carrier’s FTKs declined 9.5% to 3.0 billion FTKs, compared to the same period for the year prior. EVA Air ’s cargo traffic, measured in freight tonne kilometers (FTKs), saw a steep decline of 14.0% year-over-year for the month of July to 280 million FTKs. Year-to-date, EVA’s cargo traffic is down 10.4%, and tonnage is down 11.3%. Hong Kong International Airport (HKG) reported a 12.0% drop in July cargo throughput to 401,000 tonnes. Year-to-date, tonnage is down 6.9%. Discussing the results, the airport blamed declines on “weaker performance in transshipments and imports, which were both down by 12%. Shanghai Pudong International Airport Cargo Terminal Co Ltd (PACTL), reported July cargo throughput of 151,000 tonnes, down 7.4% from July 2018. Year-to-date PACTL’s throughput is down 10.0% to 981,000 tonnes. The terminal’s smaller domestic cargo operation reported year-over-year growth of 20% in July to 9,000 tonnes, and is up 2.8% year-to-date. International cargo, meanwhile, slipped 7.4% for the month to 151,000 tonnes and is 10.0% lower for the first seven months of the year. Europe & Middle East Lufthansa Group reported July cargo traffic that was flat at 897 million FTKs. An 8.5% year-over-year drop in demand from the Asia/Pacific region for the month of July was offset by a 3.6% increase in traffic for the Americas region. Lufthansa also reported growth of 42.4% and 4.1% for the Middle East/Africa and Europe regions respectively, though these regions comprise just under 10% of Lufthansa Cargo’s traffic. Year-to-date, traffic is 2.0% lower at 6.1 billion FTKs. Air France-KLM ’s July traffic declined by 5.8% y-o-y to 694 million FTKs. Air France and KLM both reported similar declines of 5.7% and 5.9%, respectively. For the first seven months of the year, the group’s total cargo activity was down 0.1% y-o-y to 4.8 billion FTKs. International Airlines Group reported another slight increase in traffic for July. Across the Group, traffic rose by 0.6% y-o-y to 465 million FTKs. Traffic increased at Aer Lingus and Iberia, which both account for a relatively small share of IAG’s overall cargo traffic, and was down slightly at British Airways (-1.9%), which accounts for most of the Group’s traffic. Year-to-date, IAG cargo traffic is up 1.0% to 3.3 billion FTKs for the first seven months of the year. Frankfurt Airport (FRA) reported July cargo throughput up 1.5% to 179,000 tonnes on the absence of the handling problems that were experienced in 2018. For the first seven months of the year, throughput was 2.2% lower at 1.2 million tonnes. Schiphol Airport (AMS) saw a 10.5% decline in cargo throughput to 129,000 tonnes for the month of July. The drop resulted from of the continued decline in the number of freighter movements, which were down 11.6% compared to July 2018. Although better utilization of bellyhold capacity on some routes has prevented steeper drops, declines are notable for cargo moving to and from the Far East. Heathrow Airport (LHR) reported a 6.4% y-o-y decline in June cargo throughput to 131,000 tonnes. Year-to-date tonnage was 4.9% lower at 934,000 tonnes. Americas LATAM Cargo ’s July traffic increased 2.2% year-over-year to 313 million RTKs. Year-to-date, traffic is up 1.9% to 899 million FTKs. Delta Air Lines reported a decline of 8.5%, to about 180 million FTKs. Year-to-date, Delta’s cargo traffic is down by 8.1%.

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CARGO FACTS CONSULTING

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