'A hard landing' as Asia-North Europe freight rates collapse to $1,000 a box
There seems to be nothing ocean carriers can do – or are prepared to do ...
Air freight demand has continued buoyant into 2017, after a healthy final quarter last year.
While rates appeared to fall back in December after a strong November, January has bucked normal trends with a reasonably good start.
Much of the boost was down to China’s growing middle-class, which helped balance European imports and buoyed rates. Better still, firms are confident that the strong start will continue past Chinese New Year.
Both Volga-Dnepr Group’s head of sales and marketing, Robert van de Weg, and Air Charter Service (ACS) group cargo director Dan Morgan-Evans agreed that the year had started well, largely based on the strength of European automotive imports into China.
Mr Morgan-Evans said: “The European automotive market has really taken off – cars are tailor-made and there are new developments and new technologies boosting consumer markets.
“Importantly, the Far East offices have had traction; there are not just peaks and troughs in Asia but rather a consistent stream of business.”
Mr van de Weg said that while rates were below what they were in November, “they are healthy for the time of year, with a stable Chinese market helping this”.
He said: “The first nine days of 2017 were robust; then followed a bit of a lull in the second week; but the impending Chinese New Year holiday [starting 28 January] has built this back up and rates are on the climb.
“The usual shutdown in China during the holiday will cause a brief stall, but the backlog this creates will need clearing.”
Last year, which saw a weak first half, rebounded to create a stronger year than 2015.
Asian airlines saw particularly strong year-on-year growth for December – including Cathay Pacific (up 10%), Air China (11%), ANA (8%), China Southern (14%), China Airlines (13%). Turkish, meanwhile saw year-on-year growth of 33% and United was up 16%. Only Delta (down 3%) and LatAm (down 2%) saw volumes fall.
BFS, the main cargo handler at Bangkok’s Suvarnabhumi Airport, handled more than 138,000 tonnes of imports over the 12 months to December, equating to year-on-year growth of 9%. Export growth was a little more muted, with volumes up by just over 3% compared with 2015.
A full-year downturn of 17% in transhipment volumes scuppered the handler’s combined cargo volume growth to just 3%.
Conversely, Hong Kong Air Cargo Terminals (HACTL) reported its steepest growth in transhipments – surging more than 29% year-on-year – while imports dipped 8.3%. Export growth was slightly below that of Bangkok, up 2.1% on 2015 but overall the handler found itself up 1.5% year-on-year, having handled 1.6m tonnes.
Mr Morgan-Evans explained that while 2016 lacked the big spike 2015 experienced – largely as a result of the US west coast ports strike – the underlying performance had improved. Similarly, HACTL chief executive Mark Whitehead thought 2016 a satisfactory year, despite what he described as a disappointing start.
“The best results showed in the second half, and are hopefully indicative of a more settled picture for global air cargo that will continue into 2017,” said Mr Whitehead.
However, one senior air freight forwarder told The Loadstar he believed the increase in business had been the result of artificial scenarios aligned with the demise of Hanjin and the Samsung Note 7 crisis.
“We have seen some mobile phone manufacturers increasing production of models due to failed production – notably Samsung – and various other anomalies,” he said.
“How long will it last? My personal view is that with Chinese New Year being early, these levels will run through to 27 January and then slow down.
“It will be interesting as to what the carriers will do with capacity then.”