Modest demand growth in January, but what does it signify?

The Champagne bottles we uncorked last month to celebrate the growth of demand for air freight in 2016 are long since empty, and it is time for a sober look at whether that demand growth – which peaked at 10% in December – has carried into the new year.

But, sober or not, looking at January cargo traffic doesn’t tell us as much as we would like, because year-over-year growth can be heavily impacted by the timing of the Chinese New Year holiday. So, while the chart at right shows that many of the world’s major cargo carriers and airports reported modest y-o-y demand growth in January (with American and United well into double digits), we will have to wait for the combined January/February results before we draw any conclusions about underlying demand.

Now for the details…

Asia Pacific

Cathay Pacific Airways reported January cargo traffic up 1.0% y-o-y to 863 million RTKs. This is down from the mid-single-digit gains of the recent peak season months, but until combined January/February results are available (eliminating the impact of the timing of the Chinese New Year holiday) it is hard to draw any conclusion about underlying trends. Discussing the January results, Cathay’s General Manager Cargo Sales & Marketing Mark Sutch said: “We got off to a solid start in 2017. Tonnage grew ahead of capacity and showed an increase over the same month last year. We saw a good rebound in demand from Hong Kong, Mainland China and various key Asian markets. Yield was sustained through a better mix of priority and special shipments. There was also robust demand for fresh produce and seafood across the network. We operated a number of extra-sector freighters to the Americas, Europe and India in January, while cutting back on capacity in February to adapt to Chinese New Year’s January start.”

Beijing-based Air China reported its January cargo traffic up slightly (0.3%) y-o-y to 557 million RTKs. International traffic was up 2.2% for the month to 410 million RTKs, barely enough to overcome a 4.0% decline in domestic traffic to 139 million RTKs. The much smaller regional traffic fell steeply, down 14.4% to 8.3 million RTKs.

Guangzhou-based China Southern Airlines reported January traffic up 1.0% y-o-y to 537 million RTKs. International traffic was up 4.5% to 382 million RTKs, but domestic traffic dropped 6.7% to 152 million RTKs. The much smaller regional traffic fell 9.4% to 1.7 million RTKs.

Shanghai-based China Eastern Airlines reported January cargo traffic down 2.3% y-o-y to 400 million RTKs, ending a seven-month stretch of positive growth that followed a long period of declines. International traffic was up slightly (0.5%) to 306 million RTKs, but the total was dragged into negative territory by a 10.9% drop in domestic traffic to 83 million RTKs.

Shanghai Pudong International Airport Cargo Terminal Co Ltd (Pactl, the biggest handler at Shanghai’s Pudong Airport) reported a 4.9% y-o-y increase in its January cargo handle to 139,000 tonnes, with the growth coming despite the CAAC’s ongoing ban that restricts Pudong from adding new flights. International volume for the month was up 6.0% to 130,000 tonnes, while the much smaller domestic volume fell 9.4% to 9,000 tonnes (most of Shanghai’s domestic cargo moves through nearby Hongqiao Airport).

Singapore Airlines reported January cargo traffic up 3.5% y-o-y to 559 million RTKs, a continuation of the trend of solid gains it reported in 2016.

Taiwan-based EVA Air reported January cargo traffic up 7.5% y-o-y to 292 million RTKs, its eighth consecutive positive result after a year-and-a-half of declines.

Europe & Middle East

The demand recovery at Lufthansa that started in July and August last year, continued through the beginning of 2017, with the carrier reporting January cargo traffic up 4.9% y-o-y to 736 million RTKs. The growth was led by a 7.1% increase in traffic on the Asia-Pacific lane to 346 million RTKs. The carrier’s other major trade lane, connecting Europe to the Americas, also performed well, with traffic up 5.1% to 310 million RTKs. However, traffic to/from the Middle East and Africa fell sharply (down 6.6%) to 54 million RTKs.

Air France-KLM continued its multi-year trend of declines, reporting January cargo traffic down 1.3% y-o-y to 659 million RTKs. Of the two carriers in the group, Air France reported modest growth in air freight demand, with January traffic up 2.1% to 278 million RTKs, but this was negated at the group level by a 3.7% drop at KLM, to 381 million RTKs.

International Airlines Group reported January cargo traffic up 2.8% y-o-y to 434 million RTKs. Subsidiary carrier British Airways reported January cargo traffic up 5.5% to 348 million RTKs, while Iberia’s cargo traffic tumbled 7.3% to 76 million RTKs. The much smaller cargo traffic at Aer Lingus was flat with January 2016 at 10 million RTKs.

Turkish Airlines reported January cargo volume up 7.6% y-o-y to 63,000 tonnes. While this is strong growth compared to most of the carriers in this report, it is down considerably from Turkish’s more than 20% growth in 2016.

Frankfurt Airport (FRA) reported its cargo handle up 5.6% y-o-y to 169,000 tonnes in January.

Amsterdam’s Schiphol Airport reported its January handle up 7.3% to 135,000 tonnes.

London’s Heathrow Airport (LHR) reported its January handle up 4.4% to 124,000 tonnes.

Americas

Cargo traffic continued to fall at Chile-headquartered LATAM Airlines Group, which reported January traffic down 2.4% y-o-y to 281 million RTKs. This is less bad than what LATAM reported for most of 2016, but LATAM continues to lag the performance of most of the world’s big cargo carriers.

United Airlines reported January cargo traffic up 16.1% y-o-y to 341 million RTKs, its tenth consecutive month of strong gains after a poor start to 2016.

American Airlines Group reported January cargo traffic up 15.1% y-o-y to 278 million RTKs.

Its big US competitors may have posted double-digit growth, but Delta Air Lines remains firmly mired in decline, reporting January cargo traffic down 5.9% y-o-y to 218 million RTKs.