As FlyingTypers went to press, a startling 11.3 percent year-on-year growth in exports recorded by China in June caught most analysts off-guard. Following the acceleration—led by exports of electronics and high-tech products to the EU, U.S., and Japan—HSBC predicted “stronger global demand will support export growth [from China] in the coming quarters.”
      Indeed, the export outlook is bright across Asia. Certainly, the latest Purchasing Manager Index readings suggest solid demand in the coming months.
      “After a couple of months of fizzle, exports are again showing some sizzle,” said HSBC economist Frederic Neumann. “Across Asia, with the lone exception of Korea, new export orders expanded [in June]. Possibly, we are catching the early part of the iPhone production ramp-up.
      “It’s all consistent with a fairly decent summer.”
      The good news on forward demand comes hot on the heels of a positive May. Although Drewry’s East-West Airfreight Price Index dropped by 3.1 percent month-on-month due to lower rates on Asia to North America lanes, the index was still 5.3 percent higher in May 2017 than a year earlier. Drewry believes this indicates “strong underlying market fundamentals” and expects “airfreight rates to rebound in June.”
      WorldACD recorded a year-on-year increase in chargeable weight of 12.8 percent in May and concluded “macro-economic indicators seem to hint that the present situation looks fairly robust.”
      The air freight analyst said growth in e-commerce may be one factor explaining the surge in cargo witnessed since the second half of 2016. “Yet, we do not see this trend reflected in large increases in express air cargo,” added WorldACD. “We note the largest growth in regular shipments weighing more than 1,000 kilograms, a clear sign that most e-commerce finds the regular speed of air cargo good enough, and that e-commerce is definitely not a matter of individual small parcels flying across the globe.”
      The Association of Asia Pacific Airlines (AAPA) also said volumes remained buoyant in May. Asian carriers saw international air cargo demand, as measured in freight ton kilometer (FTKs), register a solid 12.2 percent year-on-year increase, while the average international freight load factor also rose significantly, by 4.7 percentage points to 65.6 percent, following a comparatively modest 4.3 percent expansion in offered freight capacity.
      IATA’s latest figures revealed that global air cargo demand, also measured in FTKs, grew 12.7 percent year-on-year in May 2017. Significantly, this was up from the 8.7 percent annual growth recorded in April 2017 and was more than three times higher than the five-year average growth rate of 3.8 percent.
      IATA took the view that the continued expansion of air freight demand was consistent with an improvement in world trade and new global export order readings, which remained close to six-year highs in May. However, IATA warned that there were signs that the cyclical growth period may now have peaked. “The global inventory-to-sales ratio, for example, has started rising,” said IATA. “This indicates the period when companies look to re-stock inventories quickly, which often gives air cargo a boost, has ended.
      “Regardless of these developments, the outlook for air freight is optimistic with demand expected to grow at a robust rate of 8 percent during Q3 2017.”
      IATA noted the element of downside demand risk in Q3, which was also borne out by the June survey results for the APAC Forwarding Index produced by Mike King & Associates and Logistics Trends & Insights LLC.  This revealed that the 3-month air freight outlook took a downward turn in June with only 22.6 percent of survey respondents anticipating ‘higher’ volumes in the next three months. 38 percent indicated ‘lower’ volumes while 39.4 percent anticipated the ‘same’ volumes.
      “In the next three months there will be growth in air cargo, but we expect rates to be flat,” said one respondent.
Geoffrey