The predicted pre-Chinese New Year upsurge in air freight demand in January and early February failed to materialize, leaving carriers facing a bleak first quarter, with many Western retailers’ inventories reported to still be well-stocked.
     “It simply didn’t happen,” said one Hong Kong-based forwarder. “Exports from China, Korea, and Taiwan were slow, and we’re not now expecting any upturn until at least the end of March and perhaps longer.”
     This view was supported by a range of disappointing purchasing manager index figures for new export orders—Indonesia, China, Malaysia, and Taiwan have all reporting contracting orders in recent weeks.
     “It used to be that activity spiked in the month leading up to China’s New Year: workers rushed to get orders filled before taking off for a long holiday,” said a note from HSBC. “No longer. Things turned even soggier in January, with little sign of a bounce any time soon. China continues to move sideways, while Korea and Taiwan slipped again.”
     As reported in FlyingTypers, analysts at Drewry had forecast a demand and rates rebound in January after the Drewry East-West Airfreight Price Index recorded its steepest monthly fall in December. However, the Index—a weighted average of all-in airfreight “buy rates” paid by forwarders to airlines for standard deferred airport-to-airport airfreight services on 21 major East-West routes—instead dropped further in January, down 7.4 points to 83, its lowest level since the Index was first launched in May 2012.
      Last month’s drop in pricing on major lanes represented the third consecutive month of falling pricing, during which the index declined 16.7 points from its October peak. Indeed, compared to the same month last year the Index is now a startling 16.4 points lower.“
     Rates were expected to strengthen on the back of tighter capacity conditions in the run up to an early Lunar New Year, but the anticipated peak did not materialize,” said Drewry. “The fact that the index has hit an all-time record low further reinforces the perilously weak state of the market.”
     Despite the earlier start to CNY in 2016 compared to 2015, Cathay Pacific saw just a 0.3 percent year-on-year increase in cargo uplifted in January, despite a 2.4 percent increase in offered capacity and surge in shipments towards the end of month.“
     We saw a falloff in airfreight demand after the end-of-year peak and we reduced the number of freighter services operated accordingly,” said Mark Sutch, Cathay Pacific General Manager Cargo Sales & Marketing.
     Sutch said demand on the key transpacific routes had been solid, and Cathay continued to see strong cargo traffic to and from India, but added, “rate-cutting as a result of overcapacity continued to put significant pressure on cargo yield.”
     Frank Naeve, Lufthansa Cargo Vice President Asia-Pacific, said the carrier had seen a peak ahead of Chinese New Year but recovery had been slow since. “It is too early to make a serious prognosis on how the whole year will pan out,” he added. “Whilst it’s true that the overall macroeconomic indicators are not all positive, Lufthansa Cargo still sees opportunities to expand our presence in Asia in 2016, including China.There is no doubt that we are facing challenging market environments. However, the picture is a differentiated one and as such we have to remain flexible in order to take advantage of dynamic market changes.”
     Drewry expects airfreight rates to remain weak until demand picks up in the Northern Hemisphere as European and North American retailers rebuild inventories for the new spring season.
     Yet analysis by Hackett Associates suggests Drewry’s forecasts could again prove overly optimistic. The consultant’s Global Trade Pulse concluded that U.S. imports were unlikely to see much growth over the coming months and exports were also trending down due to the strength of the Greenback. In Europe imports had also been in decline and the export pulse “flat.”
     The collapse of global stock markets, according to Ben Hackett, was pushing global consumers to save rather than spend. “What we are seeing is a fundamental change in the way that the global economy reacts to political and financial instability,” he said. “Gone are the days of heady consumerism, replaced by a more cautious approach to spending and a distrust of institutions.”
     Worryingly, Hackett warned the transport industry to “forget about strong growth.”
Sky King

      Nagpur will soon benefit as the only city in India to develop the ambitious Special Economic Zone (SEZ), featuring a Multimodal International Hub and Airport. (MIHAN)
     Chief Minister Devendra Fadnavis along with Minister for Surface Transport and Highways Nitin Gadkari have revived the MIHAN plans.
      In fact, the city is on the fast track to development and will spend a whopping Rs 1508.36 crore.
The keenness of the government to boost infrastructure has seen some crucial decisions.
 
Fadnavis The Terminator

      The Maharashtra government under Chief Minister Fadnavis sent out a tough message to quite a few who had been allotted land at MIHAN-SEZ. Of the 80-odd companies that had been given land, 63 of them were sent notices of termination since they had not done any work on the ground.
      The notices were sent after a recent meeting of the Special Task Force on MIHAN, chaired by Gadkari.
      The 63 erring companies had purchased plots a few years ago.
      According to sources present at the meeting, if some of the companies showed their willingness to start work and provided a roadmap for time-bound implementation of their project, the authorities would think about giving them more time and the termination notices could be withdrawn. Incidentally, among these companies are some well-known names like HCL, Wipro, Max Aerospace, etc.

      In a related move, the government of Maharashtra has decided to send out an invitation to those keen to invest in the MIHAN-SEZ area. For his part, Gadkari is believed to have instructed the Maharashtra Airport Development Company Limited (MADC)—the special purpose company set up to develop MIHAN and aviation infrastructure in Maharashtra—to meet air carriers like Jet Airways, IndiGo, SpiceJet, etc. to boost air traffic at Nagpur.
      In fact, MIHAN received a significant boost from Gulf major Etihad sometime ago, when its President and Chief Executive Officer, James Hogan, met Fadnavis in Mumbai. He told the chief minister that the carrier would invest in the state. Officials present at the meeting said that Etihad wanted to set up a logistics park in the MIHAN complex. Even CM Fadnavis tweeted about his “fruitful” discussions with the Etihad team. They talked about bilateral cooperation in aviation, logistics, and tourism. Perhaps, more importantly—as far as MIHAN is concerned—was that the spotlight was on cargo exports.
      The Nagpur project has received a big boost from the Vidarbha Economic Development (VED) Council (a body of business leaders and professionals who are committed to the economic development of Vidarbha, the region that comprises Nagpur) and its President Devendra Parekh, who said that Etihad’s interest was “a good opportunity” for the Gulf carrier to start cargo services from the city.
      “They will require manpower and finances for that. Currently, all cargo services are handled from Hyderabad,” he said.
      Following Hogan’s meeting with the CM, an Etihad team—comprising Vice President (India and Indian sub-continent) Neerja Bhatia, Vice President (Cargo) David Kerr, Vice President (Network Planning) Alex Featherstone, General Manager (Airports) Matthew Davies, and Senior Manager (International and Public Affairs) Moksha Watts—visited MIHAN.
Tirthankar Ghosh

Vol. 15 No. 17
Carmen Taylor Unplugged
Chuckles For March 1, 2016
5/20 Or Fight
A Brief Conversation With Duncan Watson
A Leap Of Faith