June Cargo traffic: more of the same

Data from the International Air Transport Association showed total worldwide air freight traffic (measured in freight tonne kilometers flown) up 0.8% y-o-y in May. Now that June statistics have come in from many of the world’s big carriers and airports it is beginning to look like another month of little or no gain, and possibly even a decline in air freight demand.

Detailed summaries of individual results are below, but the chart at right gives a snapshot of the June cargo results so far available. There are more declines than gains, but it is clear that carriers from the Middle East (as well as Russia-based Transaero, which is reporting gains of over 20%) are continuing to see very strong demand growth (see the record results from Etihad, below), so June may not look quite as bad once all carrier and airport data are available. However, our expectation is that if there is a year-over-year gain it will be very small, and there may well be a slight decline compared to June 2012.

While competitors in the rest of the world continue to struggle, carriers from the Persian Gulf region are making big gains. They are not public companies, and do not report traffic on a monthly basis, but they do issue periodic reports that include some cargo data. Etihad Airways, for example, reported record cargo results for both the second quarter and first half of 2013. The Abu Dhabi-based carrier said second-quarter cargo volume was up 26% y-o-y to 113,000 tonnes and cargo revenue up 20% to US$216 million. For the first half of this year, Etihad’s cargo volume was up 23% to 215,000 tonnes and cargo revenue up 19% to $411 million. Etihad now operates three 777Fs and three A330-200Fs, and ACMI leases one 747-8F from Atlas Air and two 747-400Fs (one from Atlas, one from Martinair). It has one more A330-200F on firm order with Airbus.

And what of Hactl? Hong Kong Air Cargo Terminals, historically the biggest cargo handler in the world, has often been used as a bellwether for the entire industry. But with Cathay Pacific (its largest customer) moving more and more of its cargo handling to its own new terminal at Hong Kong International, Hactl’s numbers will henceforth show sharp year-over-year declines. In fact Hactl reported its June handle down 7.1%, but this is more a reflection of the loss of some of Cathay’s business than of any trend in Hong Kong – evidenced by the fact that the Hong Kong International reported its total June handle up 1.0% y-o-y, and its first-half handle up 1.9%

Asia Pacific

Cathay Pacific Airways reported June cargo traffic down 4.0% y-o-y to 679 million RTKs, continuing the general trend of declining demand that has been in place for over a year. For the first half of the year, Cathay’s cargo traffic was down 4.6% to 4.12 billion RTKs. In discussing the June result, Cathay Pacific General Manager Cargo Sales & Marketing James Woodrow said: “The airfreight markets remained soft in June and we saw both tonnage and load factor falling despite a slight increase in capacity. There was no change in the overall situation in either of our key markets, Hong Kong and Mainland China. On the long-haul routes, demand to North America continued to be better than to Europe, which remained weak. The most important development last month was the latest stage in the opening of the Cathay Pacific Cargo Terminal in Hong Kong, as we began to process import cargo from both Cathay Pacific and Dragonair inbound passenger flights. The terminal will be fully operational later in the year.” This shift of cargo to its own terminal has begun to have a significant impact on Hactl, which until this year has handled Cathay’s cargo.

Beijing-based Air China reported June  cargo traffic up 2.1% y-o-y to 432 million RTKs. International traffic was up 2.2% to 313 million RTKs, and domestic traffic was up 2.9% to 110 million RTKs. This continues Air China’s positive trend in 2013, with the carrier reporting cargo traffic for the first half of the year up 4.6% to 2.37 billion RTKs.

Guangzhou-based China Southern Airlines reported June cargo traffic down 5.1% y-o-y to 326 million RTKs. International traffic was down 7.8% to 215 million RTKs, while domestic traffic rose 1.0% to 110 million RTKs. For the first half of 2013 China Southern’s cargo traffic was up 2.3% to 2.00 billion RTKs.

Shanghai Pudong International Airport Cargo Terminals Co. Ltd (Pactl, the biggest cargo handler at PVG) reported its June handle down 1.3% y-o-y to 108,000 tonnes. International volume was down 2.4% to 101,000 tonnes, while the much smaller domestic volume jumped 17.7% to 7,000 tonnes (most of Shanghai’s domestic cargo moves through nearby Hongqiao Airport). For the first half of 2013, Pactl’s handle was up 1.5% to 604,000 tonnes.

Hong Kong Air Cargo Terminals (Hactl) reported its June handle down 7.1% y-o-y to 215,000 tonnes. Export volume was up 2.5% to 121,000 tonnes, but that was the only good news, as import volume fell 14.8% to 50,000 tonnes, and transshipment volume dropped 18.9% to 45,000 tonnes. These results come as Cathay Pacific, Hactl’s biggest customer, has begun handling some of its own import cargo (and that of subsidiary carrier Dragonair) in the new facility it opened in late February. As we move further into 2013, the impact on Hactl’s tonnage will become significant. For the first half of 2013 Hactl’s handle was up almost flat with last year (up 0.2% to 1.32 million tonnes.

Singapore Airlines reported June cargo traffic down 6.3% y-o-y to 532 million RTKs. For the first half of 2013 SIA’s cargo traffic was down 4.9% to 3.21 billion RTKs.

Europe & Middle East

Lufthansa Cargo reported its June traffic up 1.7% y-o-y to 775 million RTKs. This is the second month of positive results (May traffic was up 0.8%), reversing a long-standing trend of declines. For the Lufthansa Group as a whole, June cargo traffic was up 1.9% to 905 million RTKs. The gain came on the back of a strong performance to/from the Asia-Pacific (up 5.4% to 400 million RTKs). Traffic to/from the Middle East/Africa was up 3.2% to 82 million RTKs, but trans-Atlantic traffic fell 1.7% to 389 million RTKs. For the first half of 2013, Lufthansa Cargo’s traffic was down 2.8% to 4.24 billion RTKs, while Group cargo traffic was down 2.0% to 5.00 billion RTKs.

Air France-KLM continued to report declining cargo demand, with June traffic down 6.3% y-o-y to 837 million RTKs. Traffic was down on all major trade lanes, with the Asia-Pacific lane hit hardest with a drop of 11.8% to 328 million RTKs. And not only was traffic down, AF-KLM said cargo yield also fell, although it did not provide details. For the first half of 2013 AF-KLM’s cargo traffic was down 6.3% to 4.93 billion RTKs.

International Airlines Group (parent of British Airways and Iberia) reported June cargo traffic down 8.7% y-o-y to 463 million RTKs. Both subsidiary carriers reported declines, with BA down 8.2% to 383 million RTKs and Iberia down 11.1% to 80 million RTKs. For the first half of 2013 IAG’s cargo traffic was down 8.4% to 2.76 billion RTKs.

Turkish Airlines continues to report very strong results, with June cargo volume up 14.8% y-o-y to 48,000 tonnes. For the first half, Turkish reported cargo volume up 17.6% to 229,000 tonnes.

Frankfurt Airport (FRA) reported its June freight handle up 2.8% y-o-y to 179,000 tonnes, continuing a trend of small gains and small declines that began in January. Overall, however, the trend has been slightly positive and for the first half of this year, FRA’s handle was up 1.0% to 996,000 tonnes. To provide some perspective to the current air freight situation in Frankfurt, we point out that while the half-year handle is up slightly over 2012, it is still 2.2% below 2007 – that is, FRA is handling less freight now than it did six years ago.

London’s Heathrow Airport (LHR) reported its June handle down 3.8% y-o-y to 120,000 tonnes. For the first half of 2013, LHR’s handle was down 4.2% to 698,000 tonnes.

Americas

Of the four big non-express carriers in the Americas, only one – American Airlines – reported a gain in June. The other three saw cargo traffic decline from 1.8% to 10.2%

LATAM Airlines Group (parent of LAN and TAM), reported June cargo traffic down 1.8% y-o-y to 346 million RTKs. The company said the decline in traffic came was “driven by weaker imports into Latin America.” For the first half of 2013, LATAM’s cargo traffic was up 1.6% to 2.22 billion RTKs.

United Airlines reported June cargo traffic down 10.2% y-o-y to 276 million RTKs. For the year through June, United’s cargo traffic was down 11.4% to 1.63 billion RTKs.

Delta Air Lines reported April cargo traffic down 5.3% y-o-y to 286 million RTKs. For the first half of the year, Delta’s cargo traffic was down 3.1% to 1.66 billion RTKs.

American Airlines reported April cargo traffic up 8.0% y-o-y to 234 million RTKs. For the first half, American’s cargo traffic was down 2.4% to 1.28 billion RTKs.