ICAO launches Introduction to Air Cargo Economics course
ICAO’s training department has launched a new course: Introduction to Air Cargo Economics. It offers ...
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The air freight market is experiencing such a strong period that unless customers have blocked space agreements (BSA) – in what is traditionally a low point in the year – there is no guarantee that cargo will be moved.
Airlines say they are having the best May/June for five or six years, while forwarders are reporting that there are no more “soft” BSAs. Customers are already concerned about air freight rates and space in the fourth quarter peak.
Several airlines attempted to raise their rates in March, only to be refused by customers. But such is the demand that, according to one source, some of the largest forwarders are now only able to book ad hoc, subject to availability, with preferred carriers, after refusing to agree earlier to BSAs.
“Everyone needs BSAs,” noted one Asian source. “Some airlines used to offer free cargo space if the customer also had contracted space – now they are only guaranteeing blocked space.
“We won’t see low air freight rates any more this year.”
Forwarders cited Cargolux’s China services as being in particular high demand, despite there being fewer hi-tech product launches at this time of year.
E-commerce in Asia has in part fuelled the growth in demand. Master loaders in Hong Kong have allocated space for e-commerce, with the tonnage expected to increase in the second half. One forwarder said he was already “worried about the air freight rate in the fourth quarter”.
Asia to the Americas is also “full”, in part because of growth in the Brazilian and Mexican markets, with much of the South American traffic going via North America. One forwarding source in Asia noted that Transpacific rates had already reached peak season levels.
However, several forwarders told The Loadstar that air freight rates were simply at the level they should be, after years of languishing at unsustainable levels.
The market situation – which forwarders have variously described as “weird”, the “best year ever”, and “positive” – is supported by air cargo data published yesterday.
WorldACD reported that the first four months saw volume up 9% compared with last year, while the same period in 2016 was flat compared with 2015.
It also noted that “the surprise of the first part of 2017” is Japan, now showing “serious growth”, both inbound and outbound. “Good news came from two smaller markets as well, with a growth of over 30% YoY for the origins Vietnam and Poland.”
However, WorldACD also noted that the “usual worldwide air cargo drop from March to April was large this year: -8% compared to an average fall of -4% in the previous three years”.
“So, the growth acceleration we have witnessed since Summer 2016 continued this year, but the size of the March-April drop in 2017 may act as a caveat against the view that good times are here to stay.”
But that caveat is not reflected in the current market, say both carriers and forwarders.
AirBridgeCargo this morning said it had seen a 17% increase in volumes in the first quarter, to 158,000 tonnes, while its load factor also rose year-on-year to 70%. Its latest delivery, a 747-8F in March, contributed to a 7% increase in frequencies, it added.
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