Air freight yield recovery on the horizon?

Netherlands-based WorldACD has released its May report on worldwide air cargo demand (measured by chargeable weight), and to no surprise global demand was nearly flat, up 0.5% y-o-y in May (see the chart, below). True, global-trade growth is still less than burgeoning, but there was some indication that yields are beginning to bottom out, and even reverse their downward trajectory along some routes.

First the bad news, overall volume growth remains insignificant.  Although a few regions, such as Europe and MESA (the Middle East and South Asia) saw growth in air freight volumes compared to annual comparisons with May 2015, this was countered by declines on shipments originating in North America, where year-over-year trade volumes declined by 4%. Given outbound volumes from the Middle East have been growing rapidly during the past few years in the high-single and low-double digits, volume growth around 4% y-o-y in May is disappointing.

With regards to USD-yields, the rut continued with an overall drop in May, although the pace of decline has slowed. Year-to-date, yields were down 16% compared to the same period last year, led by declines for freight originating in Asia Pacific and bound for Europe and North America. It should be noted that year-to-date comparisons are still influenced by the persistence of cheap fuel, which has in many cases eroded fuel surcharges. Therefore, a drop in yield does not necessarily indicate declining profitability across a particular trade lane.

Despite some weak routes, WorldACD notes improvements on a few larger routes between South America and North America, particularly on Bogota-Miami and Quito-Miami. It is no coincidence then, that this region has received much attention in recent weeks with the launch, or planned launch, of expanded service from some of the world’s top carriers.

In mid-June, Air Canada Cargo initiated flights to three destinations in Latin America with 767-300Fs on ACMI lease from Cargojet. Destinations from Toronto include Mexico City via Dallas, as well as Bogota and Lima via Atlanta. Similarly, Qatar Airways announced that it too intended to become a large player in the South American Market, and would soon launch freighter service aimed to capture a chunk of the region’s flower exports.
Worldwide ACD May 2016