News / Airfreight sector still sees signs of growth, but data clashes cloud market visibility

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Conflicting market data is skewing visibility in the airfreight sector.

April saw the second consecutive month of airfreight rate increases, according to Drewry’s East-West index, which follows 21 trades. The index of weighted averages rose 1.5 points last month, bringing it to the highest level since the end of last year, at an average all-in rate – including surcharges – of $3.38 per kg for airport-to-airport services.

But this marginal recovery, which is likely to be related to some increased surcharges, is not expected to last – and, in fact, runs counter to IATA’s latest cargo figures, which show a slight contraction in volumes.

April’s traffic volumes, it said, were lower than in January and 1.1% lower than in March.

“Levels still point toward growth, but at the weakest pace for the past five months,” said IATA.

One of the main causes of concern is the continued slowdown in China and the impact of weakened business confidence, said by analysts to be causing “jitters” in the market,  while later today a report from the US is expected to show its economy declined in the first quarter of this year.

HSBC’s latest Manufacturing Purchasing Manager’s Index for China shows that total output declined, while purchasing activity fell for the third successive month. But last week’s early Flash index, which reflects 85 to 90% of the total, showed signs of hope as it rose to 49.7 from 48.1 – although still below the critical 50 level.

“The improvement was broad-based, with both new orders and new export orders back in expansionary territory,” said Hongbin Qu, chief economist, China, and co-head of Asian economic research at HSBC.

“Some tentative signs of stabilisation are emerging,” he added.

The report does note, however, that employment has so far failed to catch up with the growth, and the Chinese labour market continues to be weak.

IATA commented: “Continued weakness in Chinese manufacturing activity remains a downside risk for regional economic performance, which ultimately would impact trade growth and airfreight demand for local carriers.”

The upside of a Chinese slowdown, say carriers, is that the market is showing more balance than before between Asia and Europe, and Asia and the US, with load factors in some cases broadly even.

“Chinese imports from Europe are growing fast and it’s a nicely balanced market for us now,” reported one source. “But it will take some time for rates to catch up with this balance. And yields continue to be low.”

Drewry expects overall pricing to fall in the coming months, as more bellyhold capacity comes into the summer season.

Capacity growth in both Europe and the US in April showed discipline, with Europe up just 0.2% and North America down 0.8%. Asia, however, saw a 7.8% rise in capacity with weakening demand, while the Middle East enjoyed an 8.7% rise in demand against an 8.1% rise in capacity. Overall, load factors declined.

Most carriers and forwarders contacted by The Loadstar reported continued signs of growth – but they are slight and could merely be relative to what was a particularly weak February.

Meanwhile, IATA Cargo’s latest e-AWB figures show that international penetration is now 14.3%, up 0.9% on last month. Special mentions go to Hong Kong Dragon Airlines and Egyptair, which saw their eAWB numbers increase by 18% and 16% respectively.

The top three countries are the UAE, with 72% penetration, Hong Kong (45%) and the US (9%). Top forwarders are Panalpina (21%), Schenker (21%) and DHL Global Forwarding (19%).