IATA cargo chartbook 2017: critical market info Q1, Q2, Q3, Q4

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We've picked out the most important market information from IATA's quarterly cargo chartbooks in 2017 so you don't have to hunt down the report on IATA's website and trawl through the data to get the key takeaways. 

Finnair Cargo summary: IATA Cargo Chartbook Q4 2017

A positive end to 2017 in regard to demand for air cargo. In its latest Q4 Cargo Chartbook, the International Air Transport Association (IATA) cites favorable supply and demand dynamics as a key driver. 

Despite a slowdown from the seven-year high seen in the previous three months, industry-wide air freight tonne kilometers (FTKs) grew by 8.8 percent. Each region registered positive contributions to this growth, however European and Asian Pacific carriers registered more of a slowdown compared to the previous period. 

Traffic increased on the four major segment-based trade lanes with year-on-year FTK growth remaining in the region of 10 to 15 percent, led mostly by international freight flown within Asia. Cargo throughput varied this period with Shanghai posting the fastest growth (10.9%), while Los Angeles and Abu Dhabi showing negative numbers.

Again, the positive momentum in air freight growth can be contributed to a rise in consumer confidence, particularly in emerging markets. The trade backdrop continued to improve even as the inventory cycle tapered off: world volumes grew by 5.1 percent year-on-year. The global Purchasing Managers Index (PMI) for export orders increased in recent months, taking it to its highest level since March 2011. The indicator remains consistent with year-on-year FTK growth of just under 7 percent in the first quarter of 2018.

With reference to cargo payload, the amount added from deliveries of freighter aircraft was the lowest since 2008. That said, additions from belly-capacity via wide-body passenger fleet deliveries are estimated to still dominate. 

Cargo yields rose by 13.1 percent year-on-year in October 2017, which is the fastest pace in seven years. More favorable supply and demand are helping to drive cargo yields as well as offset pressure on breakeven loads from higher fuel prices. 

Meanwhile, freighter utilization is currently back at levels last seen in 2012.And this increased utilization will help to reduce unit costs and reinforce financial performance.

Overall not a bad end to the year, and the outlook seems bright for the year ahead with heads of cargo expecting volumes to rise during 2018.  

Finnair Cargo summary: IATA Cargo Chartbook Q3 2017

Another positive quarter for the air cargo market. In its latest Q3 Cargo Chartbook, the International Air Transport Association (IATA) cites continuing strong demand for freight as well as a rising yield trend. 

The word for Q3 is hopeful as annual growth in air freight tonne kilometers (FTKs) accelerated to 11.8 percent – its fastest pace since late 2010. European and Asian Pacific carriers made sizeable contributions to this growth, but the pick-up was driven largely by North American airlines. Traffic increased on all of the major international markets with year-on-year FTK growth remaining in the region of 10-15 percent. Cargo throughput increased at number of key freight airports during August. Growth came primarily from Asia; while Miami and the Middle East airports (notably Abu Dhabi) showed weaker numbers.

Again, the positive momentum in air freight growth can be contributed to a rise in consumer confidence, which translates into higher consumer spending and thus a demand for air freighted goods. The trade backdrop also improved: volumes grew by 4.1 percent in H1 2017. This can be explained by a 5.9 percent increase in emerging market trade. The global Purchasing Managers Index (PMI) for export orders paused during the first half of the year. Nonetheless, the order books remain robust and the measure is consistent with year-on-year FTK growth.

Traditional demand drivers for the air freight industry have been strong. The quantity of silicon material shipments increased by 10.1 percent year-on-year last quarter – almost doubling its five-year average growth rate. Another contributing factor helping to drive the pick-up in FTK growth is the recent fall in business inventory-sales ratio in the US. The ratio has now stopped falling, which means the annual industry-wide FTK growth rate may be nearing a peak.  

So far this year, 817 tonnes of capacity have been added to the freighter fleet – nearly half the amount added in the same period last year.  And almost eight times as much belly payload capacity was added through wide-body passenger deliveries, but even this was 6 percent lower than was added last year.  

Despite indicators suggesting that the current cyclical upturn may be nearing its peak, heads of cargo remain confident about the outlook for demand over the rest of the year.

Finnair Cargo summary: IATA Cargo Chartbook Q2 2017

In its latest Q2 Cargo Chartbook, the International Air Transport Association (IATA) cites a continued upward trend thanks to a stronger global economic and trade backdrop.

The air cargo market continues to enjoy a healthy start to 2017. Industry-wide air freight tonne kilometers (FTKs) saw volumes up by 10.6 percent year-on-year, while the seasonally adjusted (SA) pace looks to have slowed.

European and Asian carriers experienced the lion's share of growth, accounting for more than two-thirds of the annual growth rate. FTK growth over the period was fastest on the international segments within Asia (16.5 percent) and between Europe and Asia (14.5 percent). By contrast, Latin American carriers made another negative contribution to growth.

Cargo throughput increased at double-digit paces, particularly from Asia with its outbound traffic. The positive momentum in air freight growth can be contributed to the recovery in global business confidence, which has levelled off in advance economies but has trended upwards in emerging markets. This is particularly evident in healthy exporter order books despite a slight backwards slide in the new export orders component of the global purchasing managers' index (PMI).

In general terms, traditional demand drivers have been solid. The number of silicon material shipments increased at the fastest pace since Q4 2014 by 12.6 percent year-on-year.

Although the payload capacity was 22 percent lower than in the same period last year, 712 additional tonnes of payload capacity were added so far this year, mostly in the form of wide-body passenger belly capacity. Large wide-body freighter aircraft utilization has continued to increase - reinforcing a stronger backdrop for profitabiliy.

On the whole, airline heads of cargo ar cofident about the demand outlook for the remaining year ahead. 

Finnair Cargo summary: IATA Cargo Chartbook Q1 2017

Good news for the air cargo market. In its latest Q1 Cargo Chartbook, the International Air Transport Association (IATA) reports a strong start to 2017 for year-on-year air freight growth.

According to airline heads of cargo, the demand outlook for 2017 looks positive. Air freight volumes continued to trend upwards with air freight outperforming wider world trade since mid-2016. While industry-wide Freight Tonne Kilometers (FTKs) rose to 8.2 percent during the three months to February, the 1.3 percent quarter-on-quarter increase was down compared to the two previous periods. 

Traffic growth has been fastest on international segment-based routes within Asia, as well as between Asia and Europe. Asia Pacific and European airlines accounted for more than 70 percent of the annual growth in FTKs over the three months to February. Conversely, Latin American carriers reported a demand contraction for the fourth quarter in a row. 

Cargo throughput has increased at double-digit annual paces at a handful of key freight airports at the start of 2017, with Asia claiming the lion’s share of growth. By contrast, growth in cargo in the Middle East has been weaker.

The positive momentum in air freight growth can be contributed to an upturn in global economic conditions due to a rise in consumer confidence. This of course translates into higher consumer spending and thus a demand for air freighted goods. 

The global Purchasing Managers Index (PMI) for export orders remain healthy and are close to a six-year high. Traditional demand drivers for the air freight industry have also been robust. The quantity of silicon material shipments increased by 10.4 percent year-on-year last quarter – the fastest pace in two years. The timing of the Lunar New Year in January may have contributed to this higher demand. Another contributing factor to the increase in air cargo performance is the fall in business inventory-sales ratio in the US over the past nine months compared to sales. This has led to businesses relying more on air cargo to replenish stock.

So far this year, additional payload from wide-body belly has continued to exceed that from freighter-only deliveries. A total of 659 additional tonnes of capacity have been added to the freighter fleet. 

In terms of crude oil prices, these trended upwards during much of 2016, and are currently around 55 USD/bbl. The level is pretty much equal to that seen during 2011-2014, and markets expect prices to rise only gradually.

In regard to freight yield, the downward trend has stabilized. The fall in freight yields seen earlier this year reflects the usual seasonal pattern: adjusting for this shows that the downward trend in yields including fuel and other surcharges has stabilized, helped by the upward trend in the load factor.

All in all, the IATA cites a solid start to the year for air freight with demand growth accelerating, bolstered by encouraging export orders.

 

 

Published April 26, 2018

Category: Market updates, Economy

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