The Freight 50: 2018’s top carriers standing strong in the face of headwinds

Signs of a slowdown in global trade and airfreight demand had already begun to surface last year, and in 2019 have materialized into a challenging global economic environment. This year’s headwinds, however, did not come as a major surprise to the industry, where leaders had warned of the eventual consequences of erecting trade barriers and discouraging the free flow of goods across the globe. When Air Cargo World last year spoke to carriers among the top 50 in providing air cargo lift across the globe during 2017, airline representatives warned that turbulence was likely ahead for airfreight. The question, then, is how are the world’s major cargo carriers adjusting to the new challenges?

The top two carriers – respectively, FedEx and Emirates SkyCargo – maintained their places from 2017, although Emirates’ traffic growth slowed substantially to only 0.7%, down from 5.8% growth from 2016 to 2017. Cathay Pacific Group also held its No. 4 spot, with a 3.6% y-o-y increase. Apart from those spots, however, 2018 saw a newcomer join the top five carriers, and one express carrier may be on its way out of the top five.

2018’s Top Five

Following FedEx and Emirates in spots No. 1 and 2, Qatar Airways Cargo leapfrogged its way into the top five to hold the No. 3 spot overall in 2018 cargo traffic, up from No. 6 for 2017. As can be seen in the chart reflecting those carriers with the largest year-over-year changes from 2017 to 2018, Qatar Airways has sustained impressive growth for years, even as airfreight enters a period of slower growth. For 2018, the carrier reported 15.8% y-o-y growth for 2018 at 12.92 billion freight tonne kilometers (FTKs), making it the largest carrier able to sustain such dramatic y-o-y increases, and putting it on track to displace Emirates from its No. 2 spot in 2019, if the carrier maintains such rapid growth.

Qatar Airways’ Chief Officer Cargo, Guillaume Halleux, told Air Cargo World that while imports into Qatar were down y-o-y during 2018, exports and transshipments both increased – by 14% and 12%, respectively. To confront more challenging market conditions, Halleux said, “We remain focused on customer service and strong commercial preference, because if you do that, then when the market is good you get the better yield, and when the market is down you are the last one to be cut.”

Cathay Pacific Group secured the No. 4 spot again, thanks to 3.6% y-o-y growth to 12.60 billion FTKs. Finally, in this year’s No. 5 spot is UPS Airlines, which fell two places in the rankings to make way for Qatar. Nevertheless, UPS reported y-o-y growth of 4.3%, coming in at just under 12.5 billion FTKs for 2018 and just ahead of Atlas Air Group’s 11.89 billion FTKs.

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Moving on up (or down)

Coming in at No. 6 this year is Atlas Air Group, which reported 6.7% traffic growth on increased flying for large customers like Amazon, Asiana, and Nippon Cargo Airlines. This year, Atlas climbed 12 spots to its new 2018 ranking thanks to changes in classification methodology. In previous years, because much of the cargo moved on Atlas metal was transported for DHL Express, traffic flown by Atlas carriers was attributed to DHL Express totals. This year the Atlas Air Group includes traffic reported by Atlas Air, Polar Air Cargo and Southern Air, which all share the same operational platform and belong to parent Atlas Air Worldwide Holdings.

Traffic attributed to DHL meanwhile, now includes only traffic moving on DHL metal. The majority of DHL’s airfreight moves via other carriers operating on that integrator’s behalf, with DHL itself owning only a fraction of the aircraft providing lift on its behalf. Last year saw that change somewhat, thanks to an order DHL placed with Boeing for 14 777 freighters. DHL still appears on the 2018 Freight 50 list, at No. 40, with y-o-y traffic of 1.22 billion FTKs – more than ten times that reported for 2017.

Facing the pressure

To mitigate the impacts of a more challenging outlook for airfreight, carriers are working to more efficiently leverage their fleets and cater to more specialized customer demand.

LATAM Cargo, which for 2018 climbed two spots to break into the top 25, told Air Cargo World that while most of the world’s focus has been on trade tensions between the U.S. and China, Latin American carriers have faced their own obstacles with “economic and political instability in Argentina and Brazil.”

“During 2018 we addressed this by maintaining a robust, customer-focused freighter itinerary, leveraging our international belly capacity and driving efficiency initiatives,” with LATAM’s approach “centered on completing the standardization of our freighter fleet around our Boeing 767-300Fs, redesigning our freighter schedules by adding new ODs, improving connectivity on our main passenger hubs and improving employee productivity,” the carrier added.

Luxembourg-based Cargolux, which moved into the top 10 carriers with 2018 traffic of 8.41 billion FTKs, told Air Cargo World that “increased demand for Cargolux’s specialized products significantly contributed to the bottom-line.” In addition to specialty shipment offerings including CV alive, CV power and CV jumbo – for live animals, engine-powered items and outsized cargo, respectively – Cargolux saw strong charter demand during 2018, the carrier said, “driven by the Europe-North America trade lane, in particular.”

With airfreight’s peak season still to come, anxieties about how much airfreight demand will materialize have been top-of-mind. Regarding outlooks for the rest of 2019, “we do not expect the market to drastically change but we still expect a peak season,” Qatar’s Halleux added. “The levels of charter pre-bookings for this winter are encouraging.”

Regarding the ongoing trade conflict between the U.S. and China, a Korean Air spokesperson said, “Although the U.S.-China trade dispute is normally regarded as bad news, we still need to keep an eye on the situation of Southeast Asian routes, since there are global companies considering the shift of their production base in China to Southeast Asia.”

“We are rapidly responding to market changes by increasing capacity to Southeast Asia in preparation for stagnation in the Chinese market,” Korean Air added.

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