01 February 2018
Global air freight revenues rose by 25%, year on year (YoY), in the fourth quarter of 2017 as the bumper year ended with an exceptionally lucrative peak season for air cargo carriers.
Although YoY volume growth slowed to 6.6% in the final quarter, partly because of a tough comparison against the busy Q4 2016, double-digit rises in prices drove up total revenues by one quarter, according to figures just published by WorldACD.
Yields, in US dollar terms, started to grow with double-digit percentages from September 2017, WorldACD noted, adding: “Capacity shortages in a number of markets, rate-of-exchange fluctuations and rising oil prices all had a role to play in the resulting worldwide airline revenue growth of over 25% in the last quarter of a truly remarkable air cargo year.”
“For the fourth quarter as a whole, YoY volume growth was 6.6%, impressive in the light of the fact that air cargo − after years of a lacklustre performance − started to grow again as from September 2016. Of course, this fact made it more difficult for the industry to record strong year-over-year volume growth figures in the latter part of 2017. However, that difficulty did not stand in the way of serious revenue growth for the airlines in Q4.”
December was unusually strong, particularly in pricing terms. December saw YoY growth of 4.5% in worldwide air cargo volumes, with the main contributors being cargo originating in Asia Pacific (+8%) and North America (+5.1%). Europe’s growth was just 2.2%, while air cargo originating in Africa contracted by 7.5% and Middle East & South Asia (MESA) and Central & South America saw an increase in step with the worldwide average.
But worldwide yields in December were up by 10%, YoY, measured in Euros, “and by a whopping 23.5% in US$”, WorldACD noted. “Compared to November, US$-yields rose by 2.5%, another noteworthy feature, as yields usually drop between November and December.”
“We can safely call 2017 a real bumper year,” concluded WorldACD. “Many records were broken, and most signs stood on green for almost the entire year. Yet, the year was no different from other years in the sense that 2017 also knew winners and losers: origin & destination cities, sectors and companies that grew, others that lagged behind.”
In its top level overview of 2017, it noted that while general cargo tonnages increased by 10.5%, specific cargo products grew by 7.4%, making for an overall volume growth of 9.6% in 2017 (10.8% in WorldACD’s direct tonne kilometre measure, DTK).
Yield improvement (in US$) was also larger for general cargo (+9.4%), compared with special products (+5.9%). Among the special products, the categories with the highest volume growth were Vulnerables & High Tech, Pharmaceuticals, and Flowers.
Of the 50 largest origin cities, four recorded a growth of well over 20%: Hanoi (leading with 25.5%), Brussels, Colombo and Ho Chi Minh City. Hong Kong remained the number 1 origin point, growing 16%.
“Of the top-10 origins, Amsterdam and Los Angeles were the ones showing slightly less growth than the worldwide average. Among the largest destinations, Doha (leading with 42%), Shanghai, Osaka, Hanoi, Mexico City, Chennai and Campinas all grew their incoming volumes by more than 20%.”
Meanwhile, the shares of total business for the individual airline groups remained “reasonably stable”, with he exception of airlines from Africa. “Whilst business from their region lagged behind, their overall growth was much higher than the growth realised by other groups,” WorldACD noted.
“The airlines based in Asia Pacific grew a bit more than average in 2017, whilst airlines based in Europe, the Americas and MESA lagged behind, albeit only slightly, thus giving up a tiny part of their overall share of the pie.”
In terms of outlook, WorldACD said was reluctant to make predictions, noting: “With positive trends continuing throughout the past year, the big question is of course how long all this will continue? As Mark Twain reportedly once said, it is difficult to make predictions, particularly about the future...”
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