First look at April

Already well into the second quarter of 2016, uncertainties remain for how airfreight demand will develop in 2016. Figures from April are perhaps the most anticipated this year for two reasons. First, the data is well-distanced from the January-February annual disruptions caused by the Lunar New Year celebration which often softens demand during one of the two months, while buoying the other, as shippers send-out goods ahead of factory idling. Though, usually by March, this impact subsides. This year is unique in that we have a second major irregularity factoring into our annual comparison. The west coast port disruptions of 2015 forced shippers to send goods by air that were normally sent by sea, as manufacturers and retailers in the United States scrambled to maintain production, and keep products on the shelf. On 12 March 2015, port workers began to return to the job, and by April, the strike factor should finally begin to disappear from annual comparisons. But will April provide us with hoped for growth?

Inside the Pactl cargo terminal at PVG

Inside the Pactl cargo terminal at PVG

Last week IATA released its figures for the first quarter of 2016, which showed a 2.1% drop, year-over-year, in overall cargo traffic, and most recently, a 2.0% drop in FTKs for March.

Admittedly it will be another two weeks before we have a complete picture of what happened in April, but traffic reported by Pudong International Airport Cargo Terminal Co. Ltd (Pactl), the biggest cargo handler at PVG provide a good first look at the month’s performance. If Pactl’s April figures are any indicator, growth appears to be modest.

Pactl reported its April handle up 3.3% y-o-y to 139,000 tonnes. International volume was up 4.3%, to 130,000 tonnes, while the much smaller domestic volume dropped 9.6% to 8,700 tonnes. For the first four months of 2016, Pactl’s handle was up 2.0% to 507,000 tonnes.

This year, even growth around 3% for the month of April would be well-received, but cargo volume growth at Pactl has been outperforming the industry for most of the year—1.5% growth in 1Q 2016, compared to the world average of a 2.1% contraction.  A realistic expectation then, is nil to modest growth of somewhere between 0% and 2% in world traffic for April. Still, the report of growth from one of the world’s biggest handlers is good news nonetheless.

One thought on “First look at April

  1. Appreciate the analysis and the way you try to address much wanted visibility about where this industry is going: this is very welcome!
    However PACTL and more generally speaking PVG is not or I should say less and less relevant of Mainland China cargo traffic (same challenge for Hong Kong and HACTL).
    The ‘Go West’ move initiated by the central government in the previous 5 year plan (#12) and the need to find cheaper labour forces is now well in place leading to the emergence of very active alternative air cargo gate-ways in central China : Wuhan Zhengzhou Chonqing Chengdu even Kunming are fast runners with now very sizeable tonnages and direct international air cargo services. Keeping track at how those new gateways are now behaving would greatly complement the picture of China’s air cargo business and the way it eventually recovers (if so doing).

    More generally speaking I would question the general opinion that China remains the leading driver for air cargo growth (hence a leading indicator). With the Chinese fast transition towards a more centric economic growth, more domestically driven, the relative weight of China in global air transport is going to be reduced. Air cargo markets are already and will continue to be more geographically dispersed (rest of Asia, Africa, Lat Am,…etc).

    In addition,whatever the size of the Chinese air cargo market may be, the full appreciation of China as an air cargo market is to be measured as an export market – of course – but as well as a growing import market (with better value per Kg imports in the future than in the past).
    This is a major structural change from the stand point of logistics and distribution as the distribution of imported consumer goods will most likely follow the larger consumer markets of China mainland, probably not exactly coinciding to those for exports.

    Just a few thoughts for future market analysis: Always appreciate your writings.
    Didier L

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