Did the peak season
start in August? One forwarder believes it did…
The latest air cargo data reaffirmed
that demand was strong throughout the summer. More of the same is
to be expected through the end of the year.
The Confucius Temple in Nanking
was busy last Saturday, October 2, during the start of National Day
Golden Week in China.
The celebration, which continues
through October 8, sees the Chinese people spend a record high sum
of money on shopping and food during a glorious, weeklong, countrywide
Last year "Golden Week"
in China registered over one trillion Yuan spending in retail and
This year is expected to top that.
The latest raft of
air freight stats reaffirmed what most in the industry already knew—the
summer of 2017 was a beauty. IATA recorded that air freight demand
in July measured in freight ton kilometers (FTKs) increased by 11.4
percent year-on-year, the fourth time in five months that double-digit
annual growth was recorded.
Times Higher Than Norm
Moreover, July's year-on-year
increase in demand was nearly four times higher than the ten-year
average growth rate of 3.1 percent. “Demand growth continues
to significantly outstrip capacity growth, which is positive for airline
yields and the industry's financial performance,” said IATA.
“The robust growth in air cargo demand is consistent with an
uptick in global trade, rising export orders, and upbeat business
Word Up Healthy
The Association of
Asia Pacific Airlines’ August figures revealed a similarly healthy
picture. The region’s carriers saw a 12.2 percent year-on-year
increase in air cargo demand measured in FTKs, gains made possible
by “firm demand for manufactured products, particularly pharmaceutical
goods and technological equipment.”
But where next? The
view from forwarders interviewed by your correspondent in recent weeks
revealed a clear consensus—volumes in September remained healthy
and most expect demand to hold up through to the end of the year and,
possibly, into 2018. Indeed, some suggest the peak season may in fact
have started in August and demand could remain strong through to Chinese
New Year next February.
That Glitters Is Not Gold
However, one blip
could come in the first week of October, when many factories in China
will close for Golden Week. This could impact October’s figures.
It is also worth noting that year-on-year gains might be less impressive
in Q4 than thus far in 2017, but only because Q4 2016 saw a substantial
surge in demand.
However, the overall
picture is one of a resurgent market starting to experience notable
pressure on capacity and prices. For example, according to the TAC
Index, on the Hong Kong-U.S. lane prices rose from USD $2.1 per kg
in February to USD $3.98 per kg on September 25.
A spokesman for the Hong Kong Association
of Freight Forwarding and Logistics (Haffa) told FlyingTypers
that HK-U.S. lanes were now seeing space shortages and this had prompted
a rush for charters. He also predicted rates would rise through Q4.
“We hope the market will keep this momentum until Chinese New
Year in mid-February 2018,” he added.
Echoing Haffa, Paul Tsui, managing
director of Hong Kong-based forwarding and logistics operator Janel
Group, said ex-HKIA volumes were strong and carriers were doing their
best to increase uplift capacity.
A Bite From Apple
He also said that
while most of Apple’s new product launches had been flown direct
from Chengzhou, the supply chain complexity of the product’s
components had had a wider impact on capacity out of Asia and could
further fuel demand in the weeks ahead. “We’ll be back
to normal on October 9 after the holidays and I expect demand will
drive up for some time depending on the sales of iPhone X,”
he said. “The iPhone 8 should not influence the market so much,
I don’t think.”
latest report into the state of health of the air freight sector
was highly upbeat, mirroring the positivity of analysts throughout
much of the year.
It revealed that global air freight volumes
soared 12.9% year-on-year in August. Moreover, year-on-year growth
in Direct Ton Kilometers (DTKs) rose 14.6% in the month.
It also shed light on a key driver of
the market, “namely that the average distance between point
of origin and point of destination of air cargo shipments keeps
growing, just like the average shipment size”, said the
Revenues in Greenback terms increased
23% year-on-year in August, helped by an average YoY yield increase
of 15 USD-cents and driven by the strength of the Euro against
In terms of origins, the Asia Pacific
and Europe have outperformed other regions consistently during
2017 but in August, robust growth in North America also returned.
“These three regions each posted more than 15% YoY volume
growth,” said World ACD. “In North America, the only
'outlier' was domestic air cargo, which hardly grew, another quite
“From the origin Africa, we noted
a YoY volume contraction (-4%), caused purely by declining business
to its main markets Europe and the Middle East.”
However, southern hemisphere markets like
South America and Indonesia, both origins that have thus far barely
contributed to this year's growth spurt, turned the tables in
August by recording expansion in volume of 11% and 21%, respectively.
“Most of the top air cargo origins
in the world, such as Hong Kong, Germany, parts of China, Japan,
Korea, the United Kingdom and the Netherlands, contributed to
the booming air cargo market as one would expect from these markets,”
said the analyst.
“France, Australia and the United
Arab Emirates, however, are performing well below the average
for 2017, thus seeing their relative position under some threat.
“With a growth of more than 25%
for the year up till now, Vietnam and Belgium are moving up in
the rankings, Vietnam showing growth across the board and Belgium
clearly profiting from its focus on improving its pharma transport
WorldACD has now reformed its analysis
of specific product data by recognizing eleven different product
categories instead of the previous six. The analyst said the greater
insight this enabled illustrated that growth in the transport
of high tech & other vulnerable goods was outpacing the year-to-date
growth in general cargo by 18% vs. 12.4%, while pharmaceuticals
was the only other category growing faster than general cargo.
“Of all specific cargo products,
25% of the volume originates in Asia Pacific, but 30% of the revenues
in USD$,” said the report. “In the transport of perishables
in 2017 compared to 2016, the following picture emerged: growth
was mainly driven by the flower markets, which increased by 9.9%,
and thus did much better than the markets in Fruits & Vegetables
(+5.9%) and Fish & Seafood (+4.9%).”
However, the analyst found that the two
most important flower markets have performed markedly different
during 2017. While flower transport in the Colombia-USA market
has increased by 18% YoY during 2017, the market from Kenya to
The Netherlands contracted by 1.6% and yields are down slightly
in both markets.
Rahn Brings It On
Ingo-Alexander Rahn, Global Head of Air Freight at DHL Global Forwarding,
was also positive about the rest of 2017. “In contrast to past
years, it is not only the technology sector driving the growth, but
also engineering and manufacturing, retail, consumer goods, and chemicals
as a result of a robust global economy,” he said. “At
the end of the third quarter and beginning of the fourth quarter we
see as usual also an increasing demand from the electronic sector
as electronic companies are usually launching new devices and products
during this time.
“As we approach the Christmas
season these new products have to be available in time. This is a
regular pattern and the air freight market is well aware of this additional
demand. We at DHL Global Forwarding have made all necessary preparations.”
Rahn said this anticipated strong demand
was already boosting demand for charters out of key hubs. As a result,
DHL has secured more of its own capacity via charters and through
block space agreements this year than in previous seasons.
“We have increased our contracted
capacity on the main routes and we have secured additional charters
on the transpacific as well as European routes,” he added. “With
this capacity preparation we are in the position to ensure a smooth
service to our customers.”
He was also positive that the 2017
peak season would be strong, as well as lasting longer than in recent
years. “As usual the transpacific outbound Asia is strong as
well as the trading between Asia and Europe and vice versa,”
he added. “But we also observe strong trade between Europe and
the U.S. as well as South America.
“Furthermore, Intra-Asia is also
performing well. This pattern is not much different—what is
different this year is that we start from a higher base of demand
and rate levels. Most of our customers understand this change.
“Even in the typical slack months
during the summer period the demand did not drop and we’ve seen
a start of the peak season already in August.
“A well performing world economy
and in particular a strongly rising consumer confidence suggest that
air freight growth will remain. We couldn’t observe any slowdown