Various sources suggest pricing has been sliding through May but demand indicators are strong for the rest of the year and rates seem likely to rebound this summer.
      Drewry’s East-West Airfreight Price Index, a weighted average of all-in airfreight “buy rates” forwarders pay to airlines for standard deferred airport-to-airport airfreight services on 21 major East-West routes for cargoes above 1,000 kg, rose to 88.3 in April which equates to an average rate of $2.86 per kg. This compares to 86.7 in March and just 81.8 in April 2016.
      “Led by higher rates out of Asia to North America, Drewry’s East-West Airfreight Price Index increased by 1.7 percent month-on-month in April,” said the analyst. “The index is now about 8 percent above where it stood in the same month last year, reflective of strong demand seen in the sector.”
      A number of forwarders FlyingTypers contacted reported pricing on major lanes out of Asia had subsided during May. Drewry also anticipates a similar trend in its next set of figures. “Drewry expects to see a seasonal dip in airfreight rates in May, followed by a rebound in June,” said the analyst.
      Certainly, demand indicators in Asia are almost entirely positive. The WTO now forecasts global trade growth of 2.4 percent for this year, up from 1.3 percent in 2016, although the upper end of its forecast could see trade expanding by over 3 percent during 2017.
      The Association of Asia Pacific Airlines said that on the back of strong international demand, business conditions continued to improve across Asian economies, in turn lending support to international trade activity. This helped underpin further growth in air cargo volumes in April, with demand in freight ton kilometer terms registering a 9.0 percent year-on-year surge. With offered capacity up only 2.8 percent over the period, the average international freight load factor increased by 3.7 percentage points to reach 65.1 percent. 
      AAPA said Asian airlines had recorded a 9.5 percent increase in air cargo demand in the first four months of the year “supported by a pick-up in export orders across the region’s economies.” With business and consumer confidence indicators positive, the AAPA, which is traditionally cautious with its forecasts, is now expecting continued growth in cargo markets in the coming months.
     The AAPA’s confidence was also borne out by the latest survey results for a new APAC Forwarding Index being produced by Mike King & Associates and Logistics Trends & Insights LLC.  (The full index will be published in the coming months and the May report is available to FlyingTypers’ subscribers for free here. The third monthly APAC Forwarding Index survey is also now open here.)
      52.3 percent of May APAC Forwarding Index survey respondents indicated air freight volumes were higher in May than in April, while the APAC-Europe air freight lane continued to thrive with 77.8 percent of respondents reporting higher volumes in May compared to a month earlier.
      “The Europe to APAC lane is another area of growth,” added Index analyst Cathy Roberson. “In our April survey just 54.5 percent noted higher M-o-M volumes on the lane. In May the figure climbed to 66.7 percent as respondents noted that improving economic conditions were boosting volumes.”
      On the APAC-North America lane, 57.1 percent of respondents indicated higher volumes in May than April. 28.6 percent of respondents noted higher M-o-M volumes on the North America-APAC lane in May, and two thirds of respondents reported higher M-o-M volumes on APAC-Emerging Market lanes.
      Volume figures for Asia’s leading load hubs and key carriers have also been positive. Executives at Seoul’s Incheon Airport are now expecting volumes to expand by 10 percent this year after a bright start to the year. HKIA saw volumes expand 8.9 percent in April compared to a year earlier, with exports up 14 percent in the month. Over the first four months of 2017 HKIA’s volumes were 10.9 percent year-on-year.
      At Singapore’s Changi airport volumes rose 4.4 percent year-on-year in April. After a decade of malaise in terms of cargo growth, Changi handled more than 2m tons of cargo in the 12 months ending April 2017, a record for the South East Asian hub and representative of 7 percent growth over the period. At Shanghai in China, ground handler PACTL saw volumes rise 9.6 percent in April and by 11.3 percent over the first four months of 2017, while China Southern Airlines saw its international cargo volumes increase by 16.8 percent in April and volumes were up 15 percent over the first four months of the year.
      Cathay Pacific also recorded a major year-on-year increase in cargo in April when volumes rose 10.7 percent. Mark Sutch, GM for Cargo Sales & Marketing, said demand from Hong Kong and key Asian markets to North America, Europe, and India remained buoyant, prompting the carrier to boost capacity in expectation of rising demand later in the year. “Strong e-Commerce traffic as well as capacity reduction in the market boosted Intra-Asia movement,” he added. “Yield has continued its upward trend.”
      Such is the market upturn, Cathay announced an agreement with Atlas Air Worldwide to wet-lease two Boeing 747-8 Freighters to supplement capacity. “This will enable us to provide our customers with increased options and services from June, when most market indicators are suggesting a solid year for air cargo,” said Sutch.
      Indeed, the outlook for airfreight is positive at least through the summer months, according to the May survey for the APAC Forwarding Index. Across all APAC air freight lanes, over half of respondents expect higher volumes in August than now, with optimism strongest on the APAC-North America lane where 71.43 percent of respondents predict higher volumes over the period, not least because they are expecting to benefit from key electronic product launches.
      APAC-Emerging Market and APAC-Europe volumes are also expected to see short-term expansion with 66 percent and 55.6 percent, respectively, of respondents forecasting higher volumes three months from now on the lanes.
      “The likelihood of air freight volumes falling in the coming months is remote, with just 9 percent of respondents expecting lower overall air freight volumes three months from now,” added Roberson.
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