Did November see the return of a traditional peak season, or simply a minor bump before a return to bearish normality? At this stage the jury is out, but the smart money is on the latter.
     Congestion at major export hubs in Asia was evident through the first few weeks of the month, suggesting that new electronics product launches and holiday season demand finally gave air freight operators something to cheer. But at this stage, exactly how this surge translated into volumes and yields is unclear—November data will not be available until the middle of the month.
     What is certain is that September and October both disappointed. And the outlook for December and early 2016 is, according to most analysts, challenging.
     Drewry, for example, predicted that air freight pricing had strengthened through November as the end-of-year peak season boosted short-term demand. However, the analyst predicts that pricing will again subside in December.
     Speaking to FlyingTypers in the final week of November, Brian Bourke, (left) VP Marketing at SEKO Logistics, said “there is no ‘hot’ demand right now, but we are actually seeing some demand still to Europe, but this should only last another week.”
     He said Intra Asia traffic remained strong, but said the congestion seen in some airports during the early weeks of November had been worked through. “We are not seeing any more congestion as peak season is really now over,” he added. “We are seeing some delays at airports in Northern China like Tianjin and South Korea due to heavy snow.
     “The peak season for Asia-U.S. Airfreight really lasted only three weeks, ending last week. The market has mostly returned to normal now.”
     Bourke’s assessment that this year’s peak was short certainly seems to chime with available data, most of which suggests that the lead-in to November was relatively quiet.
     Drewry’s East-West Air Freight Price Index rose for the fourth consecutive month in October, climbing 2.9 points to a reading of 102.0 [May 2012 = 100]. However, although this was the highest of the year, it was still some 13.5 points adrift of the same month last year. According to Drewry Sea & Air Shipper Insight, this performance was “indicative of continuing underlying weakness in the market.”
     Airports Council International found that air freight was also weak through September due to “a slowdown across Asian export markets and oil producing economies.”
     ACI added: “In September 2015, freight volumes were essentially flat in Asia Pacific +0.5 percent and [they saw a] slight decrease in the Middle East of -3.9 percent.”
     The Association of Asia Pacific Airlines is more prompt with its statistics than many, and it reported that even in October there was little sign of a freight rebound.
     “Demand for air cargo shipments fell slightly in October, on the back of continued weakness in export-import activities in major regional economies, including China, India, and Japan,” said the AAPA.      “Measured in freight tonne kilometre (FTK) terms, air cargo demand edged 0.7 percent lower from the same month last year.”
     Indeed, over the first ten months of 2015, air cargo demand increased just 2.2 percent year-on-year and Andrew Herdman, AAPA Director General, (right) predicted air cargo markets would remain soft “given weak global trade conditions.”
     The Stifel Logistics Confidence Index (LCI) also offered little cause for optimism. In November it fell for a sixth consecutive month—this time by a sequential 3.4 percent to reach 47.4, which indicates a contracting global trade environment. This was the Index’s second sub-50 reading in a row as well as the lowest reading since November 2012.
     Stifel, contrary to most other forecasters, also reported that overall air freight volumes fell modestly in November. “Current tonnage growth remains negative in three out of the four largest Europe-based trade lanes,” said the analyst. “Only Europe-U.S. volumes are growing due, in our opinion, largely to relative U.S. dollar strength.”
     The analyst was also less than positive for the months ahead. “The six-month outlook for airfreight anticipates slow or sideways growth in three out of four measured lanes,” said Stifel.
     “However, on the Europe-Asia route, results suggest that volumes will remain challenged for at least the next couple of quarters.”
     When the stats for November are revealed, it seems they are most likely to reveal only a brief peak season occurred in 2015, punctuating rather desolate demand in autumn and December. Expect more of the same into 2016.
SkyKing