Now in air
freight’s peak season, airlines and analysts have mixed expectations
about the likely state of European demand after a mostly disappointing
year after the highs experienced in 2017.
The National Retail Federation, which represents
many of the U.S. leading importers, predicted last week that U.S. retail
sales for 2018 would be up 4.5% over 2017, with imports set to spike in
the coming weeks, ahead of tariff hikes on Chinese imports scheduled for
By contrast, the picture in Europe looks
rather less buoyant, at least from an air freight demand perspective.
GDP growth has been sluggish across the EU, with economic expansion hindered
by deteriorating consumer and investor sentiment, while the geopolitical
and economic headwinds emanating from Turkey and the UK, both key trading
partners for the Eurozone area, have added to uncertainty.
By The Numbers
Growth in the Eurozone area hit 2.7% in
2017, the highest since 2006.
However, the European Commission expects
GDP growth in 2018 to slow to 2.1%, followed by 1.9% in 2019 and 1.7%
The rise in oil prices has also made air
freight more expensive and, combined with concerns about more restrictive
trade regulations and slow economic growth in some regions, this proved
a drag on activity in Q3.
"The situation remains positive but
is quiet for all that, with volumes still pretty weak as we wait for the
normal surge in demand which comes with the peak season," revealed
Bolloré Logistics’ air freight procurement director, Claude
"Europe is idling and activity in and
out of China is soft. Meanwhile, the growth boost in recent quarters from
booming e-commerce doesn’t provide the same lift now that it’s
become a fixed and expected part of the mix."
The Lux View
The state of play now compared to a year
ago illustrates the point. According to Mimmo Ceci, Executive Vice-President
Sales & Marketing at Cargolux, market conditions were particularly
favorable in 2017 and this resulted in an outstanding European import
“Buoyed by this momentum, we experienced
strong Q1 and Q2 in 2018 but the demand has since significantly softened,“
she told FlyingTypers.
“In Q3 2018, demand was not as strong
as initially anticipated and the demand for the peak season is definitely
less substantial than it was at the same period last year.”
Cargolux still expects a solid increase
in demand for capacity this peak but is sanguine about its strength vis-à-vis
the 2017 iteration. “The market has already began to soften and
it is highly likely that the demand recorded in 2017 will remain unmatched,
at least this year,” added Ceci.
Lufthansa Cargo is more upbeat on the European
import market. Spokesman Andreas Pauker told FlyingTypers that
air freight demand into Europe so far this year had been “rather
positive”, citing ongoing growth from Asia, solid volume increases
from North America and comparably strong growth from South America.
“We assume that there will also be
a year-end rally in 2018,” he added. “However, it remains
to be seen how strong the peak in the fourth quarter will be this year.”
A spokesperson for Taiwan-based China Airlines
told FlyingTypers that in the first half this year demand into
Europe was “pretty much in line with what we saw last year in terms
of cargo volume.”
He added: “In the third quarter, we
managed to collect Europe-bound traffic from neighboring countries to
support our load ex Taipei. As a result, China Airlines has enjoyed an
increase of our European production by 5% in the 3rd quarter.”
However, the outlook for peak season was
less optimistic. “There is no any exciting news being heard so far
as to the demand into Europe in the coming peak,” he added. “We
are therefore not really sure if demand is going to be as strong as last
year – the 2017 peak was an exceptional one after all in the recent
The Japanese export market, it would seem,
is more bullish. “The freight demand between Japan and Europe is
steady and strong for us,” said ANA Cargo’s Fumika Yamaguchi.
“Especially, exports of automobile
parts from Japan is growing and we expect this trend will last until the
beginning of December.”
Comes Black Friday
Nicola Hughes, air freight analyst with
Freight Investor Services, said that although there had been subdued consumer
expenditure in Europe during 2018, “the fact that Single’s
Day, Black Friday, Thanksgiving and Christmas are seeing a yearly increase
in e-commerce sales means that Q4 might still see a peak in air freight
as e-commerce sites fulfill last minute delivers from Asia to the West."
Wait 'Til Next Year
As for next year, there are no major game-changers
as far as European demand is concerned, not least with the UK set to officially
leave the EU in the first quarter. “The economic temperature in
the Eurozone remains distinctly cool,” noted recent analysis from
“While labor markets continue to improve,
and recent industrial production measures have seen upward revision, the
overall picture is underwhelming and can no longer be attributed to seasonal
or one-off factors.
“The slowdown in activity this year
caught many observers by surprise, but there are two primary drivers:
a slowdown in exports due to weaker global trade growth and weaker consumer
expenditure growth as a result of prices - above all fuel prices - rising
faster than incomes. Given both stalling world trade growth and still-high
crude prices, a rebound in activity is highly unlikely in the near-term.”