January’s tea leaves are hard to read

January 2016 statsMost of the world’s major cargo carriers and airports have reported their January results. Some are reporting solid increases in demand and some are reporting significant declines, but not only is there no discernable pattern, there is also the as-yet-unknown impact of the timing of the Lunar New Year holiday hanging over the reported results, so we hesitate to draw any conclusions from the results shown in the chart at right or in the detailed analysis below.

Once the February results are in, we will be in a better position to understand air freight demand trends in early 2016, but until then, all we can say is that insofar as they can be treated as meaningful, January results appear to indicate little change from the latter part of 2015.

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Now for the January details…

Asia Pacific

Cathay reports little y-o-y change in cargo activity. Hong Kong-based Cathay Pacific Airways reported its cargo business in January effectively flat with January 2015 – cargo traffic was down 0.5% y-o-y to 854 million RTKs, while cargo volume rose 0.3% to 148,000 tonnes. Discussing the results (and offering one of the first comments we have seen on the impact of the timing of the Lunar New Year holiday), Cathay’s General Manager Cargo Sales & Marketing Mark Sutch said: “We saw a falloff in airfreight demand after the end-of-year peak, and we reduced the number of freighter services operated accordingly. Demand on the key trans-Pacific routes was solid, and we continued to see strong cargo traffic to and from India. The January result was boosted by a surge in shipments towards the end of the month in advance of the Chinese New Year holiday. Rate-cutting as a result of overcapacity continued to put significant pressure on cargo yield.”

Hong Kong International Airport reported cargo volume up 1.5% y-o-y in January to 361,000 tonnes. Export volume was up 2.8% to 227,000 tonnes, while import volume declined 0.7% to 134,000 tonnes. Commenting on the January results, the HK Airport Authority said “cargo throughput to/from key trading regions in Australasia and Europe grew most significantly compared to other key regions.” We note also that, insofar as January is any kind of indicator for a full year, the result is in line with Airport Authority CEO Fred Lam’s recent prediction that while he expected growth of 4% to 6% in passenger volume in 2016, only “mild growth in cargo volume is expected due to global economic uncertainties.”

Shanghai Pudong International Airport Cargo Terminal Co (PACTL, the biggest cargo handler at Shanghai’s Pudong Airport (PVG)) reported its January handle up 6.0% to 132,000 tonnes. International volume was up 6.1% to 123,000 tonnes, while the much smaller domestic volume was up 4.3% to 9,000 tonnes. While PACTL is often considered a bellwether for the industry as a whole, we remind readers that until combined January/February data are available, it is not reasonable to draw any conclusions.

Beijing-based Air China reported January cargo traffic up 7.7% y-o-y to 554 million RTKs. This is in line with Air China’s performance in the last few months – not as spectacular as the double-digit (often more than 20%) y-o-y increases the carrier reported from mid-2014 through August 2015, but that kind of growth cannot go on for long. International traffic for the month was up 7.1% to 400 million RTKs, while domestic traffic jumped 10.4% to 144 million RTKs.

Shanghai-based China Eastern Airlines reported January cargo traffic down 0.4% y-o-y to 409 million RTKs. International traffic for the month was down 6.7% to 304 million RTKs, but a 26.6% jump in the smaller domestic traffic to 94 million RTKs was almost – but not quite – enough to push the carrier to the level of January 2015. China Eastern’s cargo traffic has followed no discernable pattern over the past two years, but has mostly varied from small gains to small losses.

Taiwan-based China Airlines (CAL) reported January cargo traffic down 5.8% y-o-y to 401 million RTKs. This is in line with its pattern through most of last year.

Taiwan-based EVA Air reported January cargo traffic down 13.2% y-o-y to 272 million RTKs. Like compatriot carrierChina Airlines, EVA’s January cargo decline was in line with its pattern last year.

Europe & Middle East

The big three Western European carriers have all reported their January cargo results, and all three show improving performance. However, before you break out the Champagne, remember that neither January nor February data can be considered meaningful on their own. The timing of the Lunar New Year holiday in Asia can cause big shifts in traffic from January to February or vice versa, so, while the news from Lufthansa, Air France-KLM, and IAG is certainly not bad, we will wait to see the February results before drawing any conclusions.

And regarding the Lunar New Year holiday, this year it fell in the second week of February. Whether this will have caused shippers to move extra freight in January remains to be seen. PACTL, the biggest handler at Shanghai’s Pudong Airport, said its January handle was up 6.0% over January 2015, to 125,000 tonnes, but it is so far the only one of the big Asian carriers and airports to report, so we will have to wait for a more complete picture to emerge.

The Lufthansa Group reported January traffic down 2.0% y-o-y to 699 million RTKs. However, that small decline hides a huge difference in Lufthansa’s cargo performance on its major trade lanes. Cargo traffic was up 7.1% to 321 million RTKs on the Asia/Pacific trade lane, but this was nowhere near enough to counter an 8.7% drop on the trans-Atlantic lane to 293 million RTKs. On the less busy Middle East/Africa lanes traffic plunged 11.1% to 58 million RTKs. Overall, while a 2% year-over-year decline is nothing to be happy about, it is an improvement over the carrier’ performance through much of last year.

Air France-KLM continues to report declining cargo traffic, but the 6.4% y-o-y decline to 667 million RTKs in January was a better result than AF-KLM reported in any month last year. Air France-KLM did not provide data on cargo performance by trade lane, but did say that its Air France subsidiary saw cargo traffic fall 6.1% y-o-y in January to 272 million RTKs, while KLM (including Martinair) reported cargo traffic down 6.7% to 395 million RTKs.

International Airlines Group reported January cargo traffic up 1.2% y-o-y to 407 million RTKs (adjusted for the recent acquisition of Aer Lingus). Subsidiary carrier Iberia saw cargo traffic up 12.3% to 82 million RTKs, while IAG’s larger British Airways subsidiary reported traffic down 1.2% to 330 million RTKs.

The generally improving trend of the three big Western European carriers is echoed by improving results at three of the region’s biggest airports:

Frankfurt (FRA) reported its January handle almost flat (down 0.1%) at 160,000 tonnes

Amsterdam Schiphol (AMS) reported its January handle up 4.7% to 126,000 tonnes

London Heathrow (LHR) reported its January handle up 2.9% to 119,000 tonnes

Again, not spectacular results, but improved over the 2015 trend of declines.

Americas

Cargo traffic continued to fall steeply at Chile-headquartered LATAM Airlines Group, which reported January traffic down 10.7% y-o-y to 288 million RTKs. The company said cargo traffic continued to be “weak during the month of January, especially in Brazil domestic and international markets.” As a result, the company added, “we continue to adjust cargo capacity through a reduced freighter operation, which resulted in a decline of 5.7% of cargo ATKs in January.

United Airlines reported January cargo traffic almost flat (up 0.2%) y-o-y at 294 million RTKs.

American Airlines reported January cargo traffic down 2.9% to 242 million RTKs.

Delta Air Lines reported January cargo traffic down 8.9% y-o-y to 229 million RTKs.

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