What’s this? Could the upward run on air cargo markets be continuing, and is IATA’s bullish line on the market going to last more than a solitary quarter? Well, yes and no.
     Certainly, the latest signals for air freight are most definitely positive and this is causing some excitement at FlyingTypers after so many fallow years, although we’re perhaps less enthusiastic than respondents to Stifel’s latest air freight index.
     Although the overall October Stifel Logistics Confidence Index compiled by Transport Intelligence slipped 0.4 points to 58.9, the air freight logistics confidence index improved 0.8 points (compared to a month earlier) to reach 56.5.
     “Trade lanes were mixed, with declines noted on the Europe to Asia lane, which fell 0.3 points to 51.3, and the Europe to Asia lane, where a fall of 0.7 index points to 51.3 was noted,” said senior Ti analyst Cathy Roberson. “Meanwhile, the U.S. to Europe lane noted the biggest increase of 3.2 points to 56.3.”
     She said the ‘expected situation’ also improved, increasing 1.2 points to 59.6 with the U.S. to Europe lane again noting the biggest gain, up 3.0 points to 57.7.
     “In the short-term it is likely air freight volumes will remain positive through the end of the year, thanks in part to new electronic product announcements and the upcoming holiday season,” she said.
     The latest volume figures also appear to be singing from the Stifel song sheet.
     September figures from the Association of Asia Pacific Airlines revealed an ongoing pick-up in international trade driven by exports from key Asian manufacturing centers. This saw international demand increase 5.3 percent year-on-year last month when the freight load factor climbed 0.8 percentage points to 64.1 percent after a 4 percent increase in offered capacity.
     Over the first three quarters, AAPA carriers recorded a 5.1 percent increase in air freight demand compared to the same period in 2013.
     Asia’s leading airports are also reporting major gains. Shanghai Pudong International Airport Cargo Terminal achieved year-on-year tonnage growth of 20.31 percent in September and volumes were up 16.55 percent in the first three quarters of 2014. Meanwhile HKIA, the world’s largest international freight airport, saw volumes climb 5.2 percent in September, and over the first nine months volumes were 6.7 percent higher than a year earlier.
     Leading forwarders and express operators are also positive on air freight. Panalpina said its air freight volumes were up 4 percent year-on-year in the first nine months of 2014, while FedEx said it expected to move more than 290 million shipments between Black Friday and Christmas Eve, an 8.8 percent increase in overall year-over-year peak seasonal volume.
     “December 15 is projected to be the busiest day in company history, with a forecasted 22.6 million shipments moving around the world,” said the company.
     Indeed, long-term forecasts—even from the notoriously bearish analysts employed by IATA—are now looking (relatively) positive.
     Driven by strong growth in the Middle East and Africa, in the period 2014-18, IATA expects international freight volumes to expand at a compound annual growth rate of 4.1 percent. The fastest growing international routes will be between the Middle East and Asia, which will expand at 6.2 percent per year.
     “An average of more than 4 percent growth for the next five years would be a marked improvement on the performance of recent years. Since 2011, for example, growth in freight tonnes has averaged just 0.63 percent per year,” said Tony Tyler, IATA’s cautious director general and CEO.
     Not one to pass up a chance to talk down market confidence, however, Tyler also warned of “overall risks to the economic outlook,” which he believes remain on the downside.
     Trade protectionism, geopolitical concerns, volatility of oil prices, competition from rival modes, and flying pigs (ok, we added that last one!) were all factors that could turn air freight’s positives into negatives, according to Tyler, who cautioned that the “air cargo industry certainly cannot afford to be complacent.”
     Hardly likely; thanks, Tony.
Sky King