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| Vol. 14 No. 62 | Tuesday
August 4, 2015 |
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| Drewry Index
Rates Drop In June
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 The steady decline of the air freight market as 2015 has progressed stood out as forwarders released their latest financials and first half volume figures were released by air freight associations and their members over the last week. After IATA concluded that carriers in most regions except the Middle East had seen “weak growth or even contractions” in May and concluded that the expansion of volumes in 2014 had “ground to a halt, and load factors are falling”, Drewry’s monthly Sea & Air Shipper Insight confirmed the trend and revealed a further drop in rates in June. The analyst’s, East-West Air Freight Price Index, a weighted average of all-in air freight "buy rates" paid by forwarders to airlines for standard deferred airport-to-airport air freight services on 21 major East-West routes for cargoes above 1,000 kg, declined by another 1.1 points in June to a reading of 88.7. This took it down to its lowest level since it was first launched in May 2012 as, in US dollar terms, it fell below the $2.90 per kg threshold for the first time.  Forwarders,
with low rates reducing their margins, have also been put under pressure
by the weak air freight market. Panalpina CEO Peter Ulber, (right) said
in the first six months of the year, the forwarding giant’s ocean
volumes grew in line with the market but its air freight performance had
been affected by strong headwinds from the under-performing energy sector
and lower automotive tonnage. Panalpina’s
air freight volumes were down 2% in the first half compared to a year earlier.“Overall, global transport demand softened considerably in the second quarter of the year,” added Ulber. In Asia, where volumes have held up reasonably well so far this year, the picture has been more mixed. The key gateways of Shanghai and Hong Kong ] performed relatively well in the first half of the year. Shanghai Pudong Int’l Airport Cargo Terminal Co., Ltd. (PACTL) saw tonnage growth of 10.89 percent year-on-year in the first six months of 2015, while Hong Kong saw a moderate 0.6% gain over the same period. But even at the world’s largest cargo airport, growth has been turning negative. In June, Hong Kong saw a 3.5% year-on-year decrease in volumes which was attributed to lower transhipments and underperformance on routes to and from Europe, South East Asia and China. Singapore’s Changi also reported a 2.2% year-on-year decline in volumes in June, although volumes were up 0.2% over the first half of the year. These trends were reflected in the performance of carriers. The Association of Asia Pacific Airlines reported softening markets in June as member carriers saw a 0.5% drop in demand compared to a year earlier. With offered freight capacity increasing by 2.5% for the month, the average international freight load factor fell by 1.9 percentage points to 64.1%. The forward outlook remains unpromising also. “Panalpina expects the slow growth of the air and ocean freight markets to continue throughout 2015,” said the forwarder.  Andrew
Herdman, AAPA Director General, said that after recording growth of 4.8%
in the first half of the year, Asian carriers had seen growth moderate in
recent months after the earlier boost in demand due to the US West Coast
ports strikes wore off when the dispute was resolved and congestion eased.
“The outlook for air cargo markets is uncertain, with signs of a slowdown
in global trade,” he added. Cathay
Pacific, which saw a marginal increase in demand in June, also said the
outlook for freight was poor. “Growth in the cargo markets has been
softening as the year has progressed and we saw a continuation of this trend
in June,” said Mark Sutch, (right) General Manager Cargo Sales &
Marketing.“[June’s] tonnage growth was almost flat year on year and fell well short of the increase in capacity in percentage terms. Traffic out of the home market was generally steady but demand out of Mainland China was more sporadic, and was again affected by strong competition. Leveraging our strong network in Southeast Asia helped maintain traffic flows on our transpacific services and we did not trim capacity on these lanes. “Conversely, demand from Asia to Europe remained weak and we pared back freighter services on these routes, relying instead on our extensive passenger aircraft belly lift.” Drewry confirmed there was little in market fundamentals to suggest that the air cargo market would rebound any time soon. “Whereas the eastbound Transpacific has taken the brunt of pricing falls in recent months, June’s decline affected all the main East-West trades in broadly equal measure,” said Drewry. “Weak cargo growth coupled with rising capacity has further weakened the market, the latter fuelled by booming passenger demand which added more unwanted bellyhold space. “Drewry expects air freight pricing to remain weak over the next few months as carriers release additional passenger capacity.” SkyKing |
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