How is 2018 shaping up? Results unclear, say industry groups

With airfreight performance results in for January, indicating 9.4 percent year-over-year growth in freight tonne kilometers (FTKs) among Asia-Pacific carriers, and 16.8 percent y-o-y yield growth worldwide, industry groups WorldACD and the Association of Asia Pacific Airlines (AAPA) are optimistic for the year ahead. However, the sunny forecast comes with a “wait and see” attitude until post-Chinese New Year figures emerge.

AAPA attributed January’s numbers to strong global trade activity that carried over from the boisterous 2017 results, continuing into early 2018, with demand for consumer, intermediate and investment goods especially firm.

“The ongoing strength in the global economy has continued to benefit the air cargo business for Asian carriers, particularly as major manufacturing hubs are located in the region,” said AAPA’s director general, Andrew Herdman. Freight load factors for Asian carriers also increased by 2.2 percentage points, y-o-y, as the 5.4 percent expansion in freight capacity lagged the increase in FTKs.

However, January’s results still represent a decrease from month-to-month, with WorldACD reporting a 7.8 percent decline in air cargo yield for January compared with December 2017. While January’s yield of US$1.89 per kilogram still represents a substantial 16.8 percent y-o-y increase, the timing of Chinese New Year in 2017, compared to 2018, likely factored into the sharp y-o-y gain.

According to WorldACD, Chinese New Year typically results in a spike in trade beforehand and diminishing trade afterwards, with the strongest decrease typically felt during the first four days after the holiday. In 2017, that drop-off occurred from Jan. 28-31, putting a damper on overall January figures for the year. With this year’s holiday falling on Feb. 16, we must wait at least another month to reach the same post-holiday level – and take the timing differential into account when examining this January’s results.

Based on data for the first three weeks of January, WorldACD pegs y-o-y volume growth, aside from Chinese New Year demand, at around 4 percent to 6 percent – “a serious growth, surely, but hinting at an overall growth pace lower than the increase shown in the full January-figures,” according to the group’s analysts.

Regardless of the impact of the Chinese “Year of the Dog” holiday demand, some discernable trends did still emerge in January, WorldACD said.

Africa, in particular, saw unusual activity among the origin regions, where volumes fell by 6.7 percent, y-o-y, even as it was the only region to report a positive yield change from December, totaling 1.8 percent. Ghana reported the strongest volume growth, y-o-y, among African origins, at 23 percent.

Australia and Japan saw the strongest increases from the Asia-Pacific region, at 26 percent and 21 percent, respectively. From Latin America, Chile experienced a 22 percent y-o-y increase, while Germany’s 18 percent growth, y-o-y, was the strongest from Europe. The Midwest in the United States saw a 12 percent y-o-y increase in outgoing cargo.