July 2018: Lacklustre performance continues - trend towards larger shipments in 2018 - market developments for past 10 years

August 31, 2018

The worldwide air cargo yield stood at a level of USD 1.88 in July 2018, 0.6% lower than in June, but still 12.2% higher than in July 2017. Measured in Euro's, the yield decreased by 2.2% month-over-month (MoM), whilst the year-over-year (YoY) increase was 10.5%.

(See www.worldacd.com/yields for more yield developments)

A minimal worldwide YoY growth is what the month of July 2018 had in store for the air cargo world: the second month in a row with only limited YoY growth, both in volume (+0.5%) and in Direct Ton Kilometers, DTK's (+0.8%). When DTK's grow more than volume, that means that cargo has shifted to longer haul markets. Thus, given the tiny difference of 0.3 %-points, the average distance between origin and final destination of air cargo shipments in July hardly increased YoY. Actually, the DTK-trend since January 2018 shows that the average distance between origin and destination still grows, but much less so this year than in previous years.

Please note: although very difficult to quantify, the technical problems the Japanese carrier NCA has faced over the summer, have most likely negatively influenced YoY growth figures for June and July.

Volumes from the origins Africa and Europe contracted YoY in July (-8.3% resp. -1.3%). Latin America kept growing (+9.5%), whilst volumes from other areas hardly changed. The destinations MESA and Europe were the only ones showing more than 1% YoY growth in July. For the year so far, Latin America is the fastest growing origin region (+11.6%) and Europe the fastest growing destination (+5.6%). Volume growth for the first 7 months of 2018 was 3.3% YoY, whilst DTK growth for the year so far fell to 4.1% YoY.

In the same period, the weight of the average shipment increased by 1.9% YoY. Looking at the so-called 'weight breaks' (0-50 kg, 50-300 kg, 300-500 kg, etc), the number of shipments above 1000 kg grew much faster YoY (+4.8%) than the number of shipments in the smaller weight breaks (growth varying between  -0.9%  and +2%). Could this stronger growth - particularly from Asia Pacific - be caused by an increase in (consolidated) e-commerce shipments? After all, it is not only integrators who move e-business across the globe...

The YoY growth % for the USD-yield was higher the further up you go in weight breaks: the smaller the weight, the smaller the yield growth %. Shipments over 1000 kgs saw larger yield increases (+17% YoY) than smaller shipments (growth increasing from 9% for 0-50 kg to 14% for 500-1000kg). The YoY increase in fuel prices may well play a role here, as the increase in absolute fuel cost, when factored in as a percentage of total yield change, weighs more heavily on the (lower yielding) larger shipments.

This year, it is 10 years ago that air cargo had its "last hurrah" before the crisis of 2009 hit the industry. How did markets develop since 2008, i.e. since just before the crisis?
Worldwide volume growth in those ten years was 31% (in spite of the considerable YoY volume drops in 2009, for some areas as  big as 40%). This figure translates into an average annual growth rate (AAGR) of 2.7%.

The big interregional markets performed as follows:

* Asia Pacific TO Europe: +20% (AAGR 1.8%)
* Europe TO Asia Pacific: +80% (AAGR 6.0%)
* North America TO Europe: +9% (AAGR 0.9%)
* Europe TO North America: +46% (AAGR 3.8%)
* Asia Pacific TO North America: +39% (AAGR 3.4%)
* North America TO Asia Pacific: +46% (AAGR 3.8%)
* Europe TO Middle East & South Asia: +60% (AAGR 4.8%)
* Middle East & South Asia TO Europe: +36% (AAGR 3.2%)

Top origin country (in % growth) in each of six regions:

* Vietnam: +275% (AAGR 14.1%)
* Ethiopia: +151% (AAGR 9.6%)
* Sri Lanka: +133% (AAGR 8.8%)
* Norway: +118% (AAGR 8.1%)
* Mexico: +82% (AAGR 6.2%)
* Ecuador: +65% (AAGR 5.2%)

Top destination country (in % growth) in each of six regions:

* Vietnam: +194% (AAGR of 11.4%)
* Qatar: +163% (AAGR of 10.2%)
* Mexico: +87% (AAGR of 6.5%)
* Russia: +71% (AAGR of 5.5%)
* Kenya: +57% (AAGR of 4.6%)
* Brazil: +37% (AAGR of 3.2%)