IATA may have joined the soirée late, but it arrived eventually. After months of bearish forecasts, the venerable association changed its tune at the start of July, finally recognizing that the slow start to the year for Chinese exports had quickly metamorphosed into accelerating growth.
     IATA recorded global air cargo growth of 4.7 percent year-on-year in May, up from 3.8 percent in April. “There are indications that world trade and business confidence [is] improving after weakness in the first quarter,” said IATA. “In particular, Chinese manufacturing activity rebounded in May, with a corresponding rise in export order growth.”
     The latest figures out of China suggest more of the same ahead. Exports in June rose 7.2 percent year-on-year to US$186.8 billion, according to the General Administration of Customs. HSBC now expects export growth to pick up in pace in the second half of the year on the back of improving European and U.S. demand, although it noted that high labor costs were still a concern for many exporters. “Some have responded by moving into mid-western provinces,” said the analyst. “As a result, combined exports from the 18 provinces in mid-western China improved 17.5 percent, outpacing the national average.”
     Shanghai Pudong’s performance is a key indicator as a bellwether for China, and figures from the hub suggest air cargo growth is outstripping headline export expansion rates. Lead handler PACTL saw volumes surge 12.36 percent year-on-year in June when it handled 121,178 tons. Indeed, freight volumes at PACTL were up 13.78 percent to a record 687,276 tons in the first half of 2014.
     “In addition to the ongoing growth in domestic imports, we saw strong double-digit growth in our international business throughout the first half of 2014,” said Lutz Grzegorz, vice president of PACTL. “The volume of international exports in particular continues to grow significantly. We are confident [about] setting a new record by the end of this year and reaching a figure of 1.4 million tons of air cargo for the very first time.”
     Hong Kong, the other key gateway for Chinese trade, has also seen robust growth in volumes in recent months. Lead operator Hong Kong Air Cargo Terminals (Hactl) racked up an 11.5 percent expansion of tonnage last month as imports increased 13.6 percent year-on-year and exports grew 8.8 percent.
     Cathay Pacific Airways volume figures were also indicative of the robustness of the sector. Cathay Pacific and Dragonair carried 140,444 tons of cargo and mail in June, an increase of 15.0 percent compared to a year earlier.
     Mark Sutch, GM Cargo Sales & Marketing, said the upswing in demand seen in May had continued through June with a surge in demand towards the end of the month as shippers rushed to meet month and quarter-end deadlines. “Demand remained robust out of Hong Kong and Mainland China, particularly on the transpacific lanes,” he added. “Shipments of perishable items continued to boost load factors out of North America back into Asia, while Europe benefitted from higher yield shipments of specialized products.”
     But although freight growth has been impressive, the supply-demand balance may take more time to steady. HSBC’s latest Asian transport report said Asian airline cargo yields were now stabilizing on the back of improving demand, although overcapacity due to additional belly space was limiting the recovery. “The positive is that yields appear to be no longer falling,” said HSBC. “In addition, various spot indices we track have started to pick up. But there continues to be divergence by route. Trans-Pacific and intra-Asia appear to be better than Asia-EU as the latter has been exposed to far more belly capacity from passenger jets.”
Sky King

FlyingTypers recently caught up with the delightful Rick Nelson, Air New Zealand GM Cargo. He said an ever-expanding network of global partnerships was helping the carrier extend its reach, bolstering the country’s economy in the process and enabling New Zealand PLC to reach the world’s most lucrative markets.
     As the frequent labor disputes, financing difficulties, and restructurings of Qantas in neighboring Australia have illustrated in recent years, end of the line carriers can find it hard to breathe in global air cargo and passenger markets driven increasingly by volume and critical mass.
     Air New Zealand Cargo has had to innovate as the airline negotiated its path amongst the giants of world aviation. As Nelson explains, the continued decline of some traditional point-to-point markets has prompted Air New Zealand to develop interline partnerships. These have now been established with some 50 Airlines and 11 land-based carriers, extending the carrier’s reach into profitable, high demand markets and offering New Zealand’s exporters and importers a valuable link to the wider business world.
     “As a relativity small carrier our ability and preparedness to be flexible, nimble, and to innovate is often a key point of difference for our customers,” he said.
     “We have worked hard on improving our alliance relationships, ensuring we are working with likeminded and service oriented partners.
     “The extension of our network has allowed us to meet the ever changing needs of our customers and to further develop our presence into new and emerging markets.”
     While integrating its cargo network with its new range of partners, over the past two to three years Air NZ Cargo has also focused heavily on ensuring that as an organization it has the right personnel and capability in the right places. “We have increased our account management and sales presence in almost every market that we serve and we are committed to investing in building the sales capability within our teams in a way that will continue to differentiate us from our competitors,” said Nelson.
     The extension of the carrier’s “virtual network” via its system of partnerships is being backed up with some financial heft over the next 12 months via the introduction of a new, fully automated One Piece Handling System for import and transshipment cargo. Nelson expects this to “further differentiate” Air NZ Cargo’s services from competitors and ensure seamless import and transship processes across its global network.
     In FY13 the carrier saw both an increase in cargo volume and yield, and further progress is expected over the rest of this year. “We had strong market growth in the first half of 2014 and we project that there will be moderate volume growth in the coming 6-12 months,” said Nelson. “There has been increased volume available to/from the US, Middle East and Europe.
     “However increased capacity in these markets has seen some carriers reduce rates to capture volume. These actions have driven a negative change in the volume/value ratios.”
     Air New Zealand is also expanding its fleet which currently takes in: 2 x 747-400, 6 x 777-300ER, 8 x 777-200ER, 5 x 767-300ER, 13 x Shorthaul A320-200, 9 x Domestic A320-200, 7 x 737-300, 15 x ATR 72-500 and 600, 23 x Bombardier Q300 and 18 x Beech 1900D.
     “We have recently taken delivery of the first of two new 777-300 aircraft and the first of ten 787-900 on order are set to arrive next month,” said Nelson. “The new additions to our fleet will provide increased capacity into some of our key sectors in the later part of this year.
     “Air NZ has also recently signed a deal to purchase 13 new Airbus A320/A321 neo aircraft. The first of these is due for delivery in 2017.”
     The fleet additions will see routing changes and increased capacity added into the market in the third/fourth quarter of 2014. “From a cargo perspective, we will experience strong capacity growth into and out of Japan and China with the introduction of the new 787-9 aircraft,” explained Nelson. “This additional capacity offers excellent growth opportunities for our New Zealand and Pacific Island customers as well as increased access to the New Zealand market from China and Japan.
     “We also have significant capacity growth to and from the North American market, which opens up additional opportunities to access USA, South America, and Europe for our North Asian, Australian, and New Zealand customer base.
     “This capacity increase also creates the opportunity for our UK, European, and American customers to grow their business portfolios to New Zealand and Australia.”
SkyKing

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