Aircraft flying full as volumes – and air freight rates – go up another gear
Aircraft are much fuller than they used to be – that’s the main takeaway from ...
The last ships before Christmas have left Asia – and the air cargo market is gearing up to pick up the last-minute spoils of the holiday season. The peak, apparently, is on.
IAG Cargo, for example, yesterday sent out an uncharacteristically buoyant press release, egging on its customers to book more air freight.
The carrier is usually more cautious in its public relations, especially about good news. But it is claiming not only has the peak begun, but it expects a 30% increase in volumes in the first two weekends of December.
It has even sent out a calendar containing the big shopping days and final delivery dates: Black Friday, Cyber Monday, Manic Monday, Green Monday…
The market has undoubtedly picked up, particularly given Chinese restrictions on ad hoc charter flights out of some major cities, which has caused some congestion and tightened capacity nicely. And, as IAG notes, it is now too late to use sea freight for Christmas.
IAG’s release quotes David Shepherd, head of commercial: ”The holiday season has evolved dramatically over the last decade, with new key dates becoming huge commercial opportunities for retailers…
“The last maritime shipments able to get goods to market before the holiday peak have already departed and, with consumers purchasing more last-minute goods, the restocking challenge will be greater than ever.”
However, according to an interesting article in the JOC this week, US Census Bureau data shows that inventories and retails stocks have risen this month, partly due to slow sales at major retailers. It also cites JC Penney, which has invested in inventory, raising it by more than 9%, to prevent stock outs.
Despite IAG’s admirable attempts to boost the market, it looks likely that air freight will see little more than a bounce – and, when compared with last year, when the peak happily coincided with the west coast ports crisis, it will fade into insignificance.
Cathay Pacific is not alone in predicting its peak will last until Thanksgiving – next week.
As Seabury notes in the latest issue of Airline Cargo Management: “Slow air trade growth for the remainder of the year seems inevitable, and is already written in the stars. There has been no port strike (so far) this year – making last year’s figures exceptional. The end of 2015 is going to appear muted, bar another one-off distortion; as such it is unrealistic to expect growth rates on par with 2014.”
It adds that yields will continue to be depressed, and currencies continue to cause problems for both shippers and airlines.
Meanwhile, today’s Stifel logistics confidence index noted that 36.4% of participants across modes believed peak season volumes would be OK, despite the subdued Chinese economy. But 33.3% thought it would be a low peak, at best.
But it could be worse for the airlines. The index showed that air freight confidence was down just 0.3 points to 48.9 – 8.1 points lower than the same time last year. The sea freight logistics confidence index fell 2.8 points to 46.1 – 15 points lower than last year.
So it’s true. Worse things happen at sea.