2JanJJaAir cargo stagnant, but what goes on in China?

July 2015 was a rather flat month in the air cargo market with volume growth of 0.7% only. No other month recorded a lower growth this year: revenue figures (in USD) were also the worst reported for 2015. In previous years, July was much better than June, but not so this year… The origin Africa again grew most (+6.2% in volume) thanks to increased business to the Middle East and South Asia (MESA) and within Africa. Europe again followed, this time with a 2.7% volume increase, mainly fueled by growth to destinations in Asia Pacific other than China. Latin America remained in the doldrums.

The yield story is unchanged as well: compared to the previous month, yields including charges (in USD) dropped again by 1.8%. For both the Transatlantic and the Transpacific market, we observed that yields in USD held up better from than to North America. Contrary to what other sources reported recently, we did not see westbound yields improve in July over June. Our database, the largest of its kind, capturing all worldwide transactions of over 50 airlines with more than 16,000 agents, showed a drop of 3.2%, worse than the decrease in the worldwide average (see also the monthly region-to-region yield indices on our website).

With all the recent news about China’s woes, this is a good moment to try to put some perspective to the stories going around.  

It used to be said that air cargo developments were the bellwether – or leading indicator – for what would happen in the general economy nine months later. Could that still be the case? Note that the origins China & Hong Kong combined (CN/HK) were outperformed YoY by the Rest of the World (RoW) for six of the last nine months …
Take a look at the figures, all of them YoY outbound as well, and draw your own conclusions:
• For the last 12 months: CN/HK +3.1%, RoW +4.5%.
• For the 12 months before that: CN/HK +7.9%, RoW +5.5%.
• For the last 9 months, CN/HK +1.8%, RoW +3.8%.

Looking at the compound growth over the past three years in outbound volumes, the Pearl River delta (China South East +37% and HK +4%) did much better than the Shanghai area (flat) and the Northeast: the latter actually experienced a decline over the full period. The west was not at all affected by the country’s recent slump: it recorded a compound growth of 81%, albeit from a modest base. Yet, its contribution to China’s outbound total grew from a modest 6% to 10% in three years.

In terms of destinations served from China, North America kept growing in 2015 and Europe kept dwindling, trends we already noted for 2012. MESA, and in particular South Asia, showed continuing growth ex China.

Lastly, let’s review the YoY figures for the destination China over the past nine months. Whilst CN/HK outbound volumes recorded a growth of 1.8% only, inbound volumes (+3.5%) kept pace with the worldwide volume growth of 3.4%. But we noted large regional differences. Volumes to CN/HK from Africa, Europe and MESA all went down, by 22%, 3% and 9.4% respectively. The Americas profited by bringing their volumes up by 17.5%. Volumes from Asia Pacific to CN/HK increased by 7.9%, recording the strongest growth in absolute terms. This development brought the region’s share of total worldwide volumes to CN/HK up from 36.9% to 38.4%, another indicator for the quickly shifting panels in world trade.