June cargo traffic indicative of growing pains at Europe’s top airports?

Following a trade war between the United States and China which began last month when US President Donald Trump announced the imposition of tariffs on about $50 billion worth of Chinese imports, all eyes were on the Asia-North America trade lane. The number of goods now subject to tariffs has increased substantially but for the month of June, carriers based in the Asia-Pacific region continued to report modest cargo traffic growth on average.

The same cannot be said for Europe’s major airports. Almost unanimously, most of Europe’s top airports, for which we have data for reported modest declines in June cargo throughput. Before reading too deeply into the figures, however, we note it could be the case that rather than a market slowdown, growth constraints at some of Europe’s top airports could be diverting cargo traffic elsewhere, to airports like Liege (LGG), East Midlands (EMA) and Frankfurt Hahn (HHN).

Turning now to a region-by-region analysis…

Asia Pacific

Cathay Pacific Airways reported June cargo traffic up 5.5% y-o-y to 1.03 billion RTKs. Year-to-date through June, Cathay’s cargo traffic was up 7.3% to 5.83 billion RTKs. Discussing the results, Cathay’s Director Commercial and Cargo Ronald Lam said: “Frontend demand across our network remained strong during the period, while backend demand also picked up moderately thanks in part to the Dragon Boat Festival and 1 July holidays. Our European and United Kingdom routes performed relatively well. A small yield growth came on the back of improved business travel and traffic mix over last year. In terms of cargo, tonnage picked up toward the end of the month. We observed a particular rise in demand on routes to Japan, owing to some capacity tightening in the market, while there was also increased uplift into the United States from Hong Kong and mainland China.”

Singapore Airlines reported June cargo traffic down 6.6% y-o-y to 551 million RTKs. For the first half of the year, SIA Cargo’s traffic was up by 0.4%.

Beijing-based Air China reported June cargo traffic up 4.0% year-over-year, to 663 million RTKs, although this figure was higher than June 2017,  the carrier’s traffic was still 2.9% lower from the month prior. Year-to-date traffic through June remains 8.4% higher over the same period in 2017. In terms of tonnage, the carrier’s domestic handle was up 7.2% over 2017, compared to growth of 4.7% for international tonnage. Air China Cargo recently told Cargo Facts that larger transshipment volumes through Air China’s Beijing hub have boosted the carrier’s domestic cargo handle.

Guangzhou-based China Southern Airlines reported June cargo traffic down 1.3% year-over-year to 632 million RTKs. International cargo traffic was nearly flat (down 0.61%) at 494 million FTKs, while domestic cargo traffic fell 3.78% to 135 million FTKs. Overall cargo and mail tonnage fell 3.4% y-o-y in June to 142,000 tonnes. It should be noted that in 2017, China Southern Cargo grew slightly faster than its China-based peers, making annual comparisons more difficult this year. Year-to-date, traffic at China Southern Cargo is still up 4.9% compared with the first six months of 2017.

Taiwan-based China Airlines reported June cargo traffic up 5.2% y-o-y to 488 million RTKs, the second-strongest year-over-year showing for the carrier so in 2018. For the first six months of the year, China Airlines’ cargo traffic is 3.8% higher than the first half of 2017, at 2.7 billion RTKs. Cargo yields meanwhile, were up 14.0% over June 2017, and up 11% year-to-date compared to the same period last year.

Taiwan-based EVA Air reported June cargo traffic nearly flat (down 0.1%) at 316 million FTKs. But the news is not all bad. Tonnage rose 3.5% y-o-y to 53,975 tonnes – the carrier’s largest handle in 2018. With load factors at 89.42% it is likely that many routes simply could not accommodate additional cargo. Year-to-date through June, EVA’s cargo traffic was 2.3% higher than at this time last year.

Hong Kong International Airport reported its June cargo handle up 0.9% y-o-y to 424,000 tonnes. For the first six months of 2018, HKIA’s handle was up 4.2%. The airport said transshipments were up 14% y-o-y.

Shanghai Pudong International Airport Cargo Terminal Co Ltd (Pactl, the biggest cargo handler at Shanghai’s Pudong Airport) reported its June cargo handle up 4.7% year-over-year,  to 162,000 tonnes. Growth was driven primarily The increase was driven by larger international cargo volumes which were 4.9% higher y-o-y. Domestic cargo throughput meanwhile, was up 1.1%. Year-to-date, tonnage moving through PACTL was 4.7% higher at  926,000 tonnes.

South Korea-based Incheon Airport’s cargo traffic increased 1.7% in June to 244,000 tonnes, in line with the slight increases so far in 2018 after 2017’s consistent double-digit growth. Year-to-date volumes through June rose by 1.8%.

Europe & Middle East

Lufthansa Group reported June traffic down 0.6% y-o-y to 913 million RTKs, marking the first year-over-year decline for the Group since June 2016. Year-to-date traffic was up by 2.9% y-o-y, significantly slower growth than the 7.3% year-to-date growth over the first six months of 2017. Cargo capacity rose by 5.2% year-over-year during June.

Air France-KLM reported a 3.2% increase in June cargo traffic y-o-y, to 723 million RTKs. Most of the monthly increase was on the Air France side, which rose 6.3% y-o-y in June to 328 million RTKs, while KLM reported a smaller RTK gain of 0.8% to 394 million RTKs. Year-to-date, Air France-KLM traffic declined by 1.4% through June, to 4.13 billion RTKs.

International Airlines Group reported a 4.3% decrease in June traffic y-o-y, to 458 million RTKs, marking the largest y-o-y monthly decrease for the Group so far this year. Year-to-date, IAG recorded a 0.5% decline in traffic over the first six months of 2018, compared to 5.0% growth over the same period in 2017. Of IAG’s airlines, subsidiary carrier Iberia reported the strongest month with 4.5% y-o-y growth to 92 million RTKs, while British Airways reported a 6.3% decrease to 354 million RTKs.

Turkish Airlines reported another month of double-digit growth in June, recording a 19.8% increase in cargo volumes y-oy to 116,000 tonnes. However, the substantial volumes recorded for June represent a month-to-month decrease from the carrier’s strongest performance so far this year, recorded in May at 118,000 tonnes. Year-to-date, volumes at Turkish are up 27.7%. On a regional basis, Turkish reported the strongest demand increase in the Central and South American regions, where cargo volumes are up 107.6% so far for 2018.

Frankfurt Airport (FRA) reported a 2.7% decrease in its cargo handle for June, to 180,000 tonnes. Year-to-date, the airport’s handle has fallen 0.4% to 1.08 million tonnes. So far in 2018, FRA has reported y-o-y declines for three out of six months, indicating a longer pattern of slowing cargo volumes at the airport this year.

Amsterdam’s Schiphol Airport reported a 3.5% decline in June traffic y-o-y to 144,000 tonnes, and a 2.6% decline over the first half of the year, to 844,000 tonnes. Schiphol cargo traffic has declined y-o-y for five out of six months so far in 2108, reflecting the ongoing capacity issues at the airport, which have contributed to several cargo flights relocating to other European airports.

London’s Heathrow Airport (LHR) reported a 2.1% decrease in its June cargo handle y-o-y to 139,000 tonnes, its lowest handle since February. Year-to-date, volumes at the airport are still up 2.2% compared to the first half of 2017.

Americas

Chile-headquartered LATAM Airlines Group continued its recent trend of positive cargo traffic growth,  reporting June traffic up 6.8% y-o-y,  to 277 million RTKs. Year-to-date, cargo traffic was  9.2% higher.

Delta Air Lines reported a 0.3% decrease in cargo traffic y-o-y for June, to 285 million RTKs, marking the first month of y-o-y declines for the carrier since February 2017. Year-to-date, traffic increased 4.3%.

United Airlines an increase of 2.8% y-o-y in June cargo traffic to 420 million RTKs. Year-over-year comparisons are likely to remain difficult for United, considering the carrier reported a y-o-y increase of 22.2% for June 2017, and saw its total 2017 cargo traffic increase 18.2%. Year-to-date for the first half of  2018, traffic is up 6.1% compared to the first six months of 2017.