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   Vol. 17 No. 31
Friday May 18, 2018

      Air cargo markets seem certain to continue expanding this year despite the relative slowdown suffered in March. And while rates in ‘greenback’ terms have remained firm on buoyant demand, one analyst notes that pricing can only be viewed in the context of currency fluctuations.

Stable & Able

      Freightos, a digital marketplace, reported last week that air freight rates were currently “very stable”, adding that the first week of May was the “sixth straight week with the same average air freight rates,” which on the China-U.S. lane, it recorded in the $2.90-$5.00 per kg range; China-Europe hovered at $2.80-$4.50 per kg and Europe-U.S. was steady at $1.80-$2.70 per kg.
      Elsewhere Flexport said ex-Europe rates in the first week of May were “trending higher” while demand for airfreight into Europe was rising, in part due to the U.S. Euro exchange rate, which was encouraging imports from the U.S.
      Ex-U.S., Flexport said that some passenger and cargo-only carriers were indicating that rates would rise in the coming months, despite the usual increase in capacity during the summer holiday months.
“Capacity is tightening on most U.S. export lanes due to continued e-commerce demand,” it added.

Study UPS

      “According to a recent UPS study, online shoppers are increasingly looking to international vendors when shopping.
      “The e-commerce trend places pressure on air freight, as shoppers look for fast delivery times.
      “The increase in demand could lead to rate increases and capacity shortages.”

The Supply Bottleneck

      Tobias Meyer, COO of DHL Global Forwarding, told FlyingTypers that supply remained a bottleneck and this would not change in the near future making air freight a sellers’ market.
      “Carriers have learned from history, and make efforts to secure their current market position by strictly managing capacity,” he added.
      “This entails dynamic pricing on constrained routes and freighter cancellations even during high demand periods to optimize load factors.
      “Furthermore, carriers have reduced the share of capacity available to Block Space Agreements, to secure additional yields out of the highly profitable spot market.”
      Meyer, the subject of a wide-ranging interview with FlyingTypers to be published later this month, also said the demand side of the equation remained strong.
      “Our view is that 2018 airfreight market volumes will grow significantly in terms of absolute additional volumes flown,” he added.
      “I do not see the market growing as strong as it did in 2017, but this is due to the fact that the market was soft until late 2016 and then tightened in 2017.
      “The baseline was low.
      “We think 2018 markets will also be tight, but we need to compare it to a very strong baseline and factor in capacity constraints. In other words, supply will be a limiting factor to growth.”

IATA Numbers Add Up

      IATA predicted growth of 4-5% in air cargo demand through 2018 despite recording only a 1.7% year-on-year increase in demand in March measured in freight ton kilometers. But although the March reading was five percentage points lower than the February result and the slowest pace of growth in 22 months, IATA said the slowdown was principally due to the end of the restocking cycle and softening of global trade.

Situation Normal

      “It's normal that growth slows at the end of a restocking cycle,” said Alexandre de Juniac, IATA's Director General and CEO. “That clearly has happened.”

Wait Until Next Year

      WorldACD, however, attributed the March downturn – the analyst recorded global demand growth of 0.9% in the month – to the late timing of Chinese New Year this year compared to 2017.
      Looking at the quarter as a whole, WorldACD recorded growth of 4.8% compared to a year earlier.
      The analyst also said that price increases so far in 2018 needed to be placed in context.
      “We need only point to the fact that the year-on-year yield increase in Q1 worldwide was 18.6% when measured in USD, but only 2.7% when expressing it in Euros,” said its latest report.
      “A similar pattern is seen when comparing yields in USD with yields in almost any other major currency.
      “In other words, the large yield increase in USD can only be understood against the background of the loss the USD suffered against many other currencies when comparing Q1-2018 with Q1-2017.
      The ‘greenback’ lost 13% against the Euro, 11% against the British Pound, 8% against the Chinese Yuan and 5% against the Japanese Yen.

Unamed Airline Source

      “The CFO of a U.S. airline, thinking and accounting in USD, will be clearly pleased, but his European counterpart, thinking and accounting in EUR, much less so.
      “Add to this that jet fuel prices have almost doubled over the past two years, and we understand that the recent large yield increase as measured in USD, may take on a different meaning for different parties.”

IATA Remains Positive

      Irrespective of currency fluctuations, IATA was positive the remainder of 2018 would deliver further growth for freight, albeit while tempering its outlook based on potential risks to trade.
      “Looking ahead, we remain optimistic that air cargo demand will grow by 4-5% this year,” said de Juniac.
      “But there are obviously some headwinds.
      “Oil prices have risen strongly, and economic growth is patchy.
      “The biggest damage could be political. “Implementation of protectionist measures would be an own-goal for all involved—especially the U.S. and China.”

   easyJet held a royal wedding competition. Prince Harry and Meghan Markle lookalikes Rhys Whittock and Inmaculada Santisteban Serrano won as best Royal couple doppelgangers.
   The judges measured on looks, the regal wave, the romantic wedding proposal and best bridal bouquet throw.
   Whittock and Serrano won a year's worth of free flights.
   No word yet if they plan to travel together.

Subscription Ad

   Representatives of the Federation of Freight Forwarders’ Associations in India (FFFAI) are out on the road promoting the FIATA World Congress 2018 scheduled to take place at Aerocity in New Delhi, September 26-30, 2018.
   Pictured at the Dubai World Trade Club, the National Association of Freight & Logistics (NAFL-UAE) welcomed the Indian delegation, pledging support for the event taking place on the subcontinent for the first time.
More: https://www.fiata2018.org

     “Well … things are beginning to stack up a little,” said Gordo.
     “It was the same old sod-hut drawl.
     “He sounded like the airline pilot who, having just slipped two seemingly certain mid-air collisions and finding himself in the midst of a radar fuse-out and control-tower dysarthria, says over the intercom: “Well, ladies and gentlemen, we’ll be busy up here in the cockpit making our final approach into Pittsburgh, and so we want to take this opportunity to thank you for flying with us and we hope we’ll see you again real soon.”
     “It was second-generation Yeager, now coming from earth orbit.
     “Cooper was having a good time.
     “He knew everybody was in a sweat down below.
     “But this was what he and the boys had wanted all along, wasn’t it?”

     Tom Wolfe, one of the truly great writers of the 20th Century wrote these words about a first U.S. Astronaut Gordon Cooper in his landmark book The Right Stuff, published in 1979.
     The NASA Space Shuttle Program, a series of air cargo flights that began with Columbia in 1981,was given a huge boost in lore and legend as a result of that book.
     Tom Wolfe died Tuesday May 16 in Manhattan at 88 years of age.
     Tom Wolfe was a driving force in the early 1960’s of what became known as “The New Journalism.”
     Mr. Wolfe, along with Truman Capote, Gay Talese, Joan Didion and others created a style of writing in which journalists immersed themselves in the stories they reported and wrote, emphasizing “truth” over facts.
     He went on to write several outstanding books, including Bonfire of the Vanities in 1987, a scathing satire directed at the New York City criminal justice system.
     “Nothing fuels the imagination more than the real facts do,” Tom Wolfe once said.
     To better understand Tom Wolfe, just listen to some words that came out of his old manual typewriter that are jargon in today’s language.
     “Fuhgeddaboudit” was his one word, New York dismissal for everything, while “radical chic” was his take on limousine liberals.
     “Good ol boy” entered the language of America after a Wolfe magazine article in 1964 about a stock car racer named Junior Johnson.
     “How I shall miss that swirling script on the handwritten notes, the flair of your white suit entertaining a room,” said Tina Brown, former editor of Vanity Fair and The New Yorker.
     “You were the best of the best,” she tweeted out.
     We say, Amen to that.

If You Missed Any Of The Previous 3 Issues Of FlyingTypers
Access complete issue by clicking on issue icon or
Access specific articles by clicking on article title
Vol. 17 No. 28
Ready Set Grow Alliances & Women
Chuckles for May 7, 2018
PayCargo On Stage At CNS
Barry Lien Barry Good
Hello And Goodbye
Vol. 17 No. 29
ATC On The Road To Tomorrow
Chuckles for May 8, 2018
Dynamic Duo Fast Track CNS
Marek More Than A LOT
Why Is This Man Smiling

Vol. 17 No. 30
Mike's On CNS Partnership 2018
Algorithm Pumps Up The Volume
Chuckles for May 15, 2018
Adam Walks On Air At CNS
No Trouble Hitting The Curve

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