Moving Cargo By The Numbers

East-West air freight rates nudged up in August and remain far ahead of last year, with new product launches from major electronics manufacturers expected to keep the market buoyant through most of the fourth quarter.
     Illustrating the strength of the recovery in air freight pricing over the last 12 months, Drewry’s Air Freight Price Index, a weighted average of air freight rates across twenty-one East-West trades, rose 0.5 points last month to 102.9 points, some 6.2 points above the August 2013 reading.
     The September air freight sub-index of the Stifel Logistics Confidence Index also showed signs of an improving market, especially on key lanes out of Asia. It rose 2.9 points in September compared to August to reach 55.7, with the “expected situation” up 3.7 points to 58.4, and the “present situation” rising 2.1 points to 53.0.
     “By trade lane, results were mixed for the present situation with the U.S. lanes declining 2.8 from Europe and declining 0.1 to Europe,” said analysis from Transport Intelligence, which compiles the Index. “However, it was the Asia to Europe lane that drove much of the gain for the overall present situation, increasing 8.1 points to 59.6.”
     TI said market positivity is being boosted by the launch of Apple’s iPhone 6. Indeed, forwarders and airlines contacted by FlyingTypers privately confirm earlier rumors that Apple bought huge amounts of cargo space to prevent competitors from easily utilizing airfreight to launch their own new products. The positive outlook is also supported by the latest data for July and August.
     IATA said freight ton kilometers flown rose 5.8 percent year-on-year in July, representing accelerated growth from June when cargo demand grew at 2.4 percent. Global air cargo volumes surpassed their previous July peak recorded in 2010, as Asia Pacific airlines reported a 7.1 percent improvement compared to a year earlier. “The fortunes of the region’s carriers are tied to the strength of major economies such as China, Japan, and South Korea, which are expanding again after a slowdown at the start of the year,” said IATA.
     Airports Council International’s July figures for the Asia Pacific also proved strong as airports in the region recorded year-on-year growth of +6.8 percent. The top four airports in the region by throughput from January to July 2014 were Hong Kong (HKG, +6.7 percent), Shanghai Pudong (PVG, +8.3 percent), Seoul Incheon (ICN, +3.9 percent) and Tokyo Narita (NRT, +9.0 percent).
     Initial figures for August suggest the resurgence in Asia continues. After racking up double-digit gains for most of the year, Shanghai Pudong International Airport Cargo Terminal (PACTL) saw volumes increase by 23 percent in July and 22.1 percent in August. Overall throughput at Shanghai Pudong in August expanded by 12 percent to 272,200 tons, aided by a 20 percent increase in regional traffic.
     Guangzhou Baiyun Airport saw cargo throughput surge 14 percent last month to 125,000 tons, while Hong Kong International Airport also saw large gains in both July and August when cargo throughput increased 8.3 percent and 8.8 percent year-on-year to 370,000 tons and 366,000 tons, respectively.
     Growth in cargo throughput at HKIA in July and August was largely driven by transshipment cargo, which was up by more than a fifth in both months compared to a year earlier. Mainland China was a strong generator of growth over the two-month period, with throughput to/from North America and Southeast Asia also featuring strongly. On a rolling 12-month basis through August, HKIA’s cargo volume is now 5.7 percent higher than a year before.
     Analysts expect the market to remain healthy in the coming weeks. “Pricing is expected to stay high, by historical standards at least, through the final quarter as rising seasonal demand combined with tighter capacity conditions supports rates,” said a note in Drewry Sea & Air Shipper Insight.
     Cathy Roberson, senior analyst at Transport Intelligence, predicted further improvements in airfreight demand through the holiday season, not least in the U.S., where trucking is faced with its driver shortage/capacity issues and railways are struggling to keep up with demand.
     “Also, with the situation at the West Coast ports still unresolved, a good bit of cargo was moved in early Spring/Summer through fear of a possible strike in July,” she said. “The strike hasn’t occurred, but shippers are still wary. Inventory is going to need to be replenished and I think we’ll see the use of airfreight increase as well as East Coast ports playing a role.”
Sky King