November 2018: a break with tradition, as world trade slackens

December 31, 2018

The worldwide air cargo yield moved up to USD 2.08 in November 2018, 3.5% higher than in November 2017, and 4% higher than in October 2018. Measured in Euro's, the worldwide yield increased by 7% year-over-year (YoY).

(See for more yield developments)

Over the past few years, November was the busiest month of the year for air cargo, but not so in 2018. Volume in Nov 2018 was not only 1.4% lower YoY, it was also lower than the month before: with a peak that was less pronounced than in previous years, November saw a drop vs October of 2%...  Although revenues per kg (yields) continued their year-long climb, since July their YoY growth % is getting smaller every month. Nevertheless, the yield-jump from October to November was larger than the MoM increases earlier in the year. All in all, airline revenues (measured in USD) rose by 2% YoY and by 1.8% MoM. Over the past four months, airline revenues kept growing, in spite of the see-saw patterns we witnessed in volumes.

Only the origins Africa (+4.9%) and Asia Pacific (+0.5%) did better in November than in October. The destinations Africa (+2.8%) and Europe (+0.3%) also registered a MoM increase. Of the largest traffic flows, Asia Pacific to Europe showed a sizeable increase of 7.2% MoM. The Middle East & South Asia, together with North America, had the dubious honour of showing a MoM decrease to each of the other five regions.

But what to make of the figures for the world’s air cargo engines China and Hong Kong?
China performed better than the worldwide average with figures of -1% YoY and +4.1% MoM. Hong Kong, on the other hand, showed a much starker, but mixed picture: -4.2% YoY vs. +8.8% MoM. And USD-yields ex Hong Kong made a  jump of 13% compared to last year, an achievement crowned by reaching a November-yield of 4.66 USD in the market from Hong Kong to the USA.

As if this were not enough deviation from the worldwide trends in November, take a look at the traffic between China & Hong Kong and the USA, presently attracting a lot of interest. Last month we interpreted the very positive YoY October figures for the market China-USA as a sign of US businesses ‘stocking up’ before tariffs would begin to bite. Could that still be the case?

Although November showed a small increase in this market over October (+1%), the YoY figures showed a drop of almost 5%. Combine this with a considerable drop in the opposite direction USA to China (-6% MoM and -8% YoY) , and we find that the overall market between these two countries fell by almost 6% YoY, and by 1% MoM. November was the first month since the trade war started that the YoY volume change for both directions was negative. It goes for both China and the USA that their performance to the rest of the world is much better than their performance to the territory of their trade war adversary.

However, to the extent that Hong Kong business is also an indicator for China-USA trade, the overall picture gets a bit fuzzy.  Whilst the November figures from Hong Kong to the USA were much worse than those for Hong Kong to other markets (even though high tech from Hong Kong to the USA was up 16% MoM), the opposite was true from the USA to Hong Kong: talking about a see-saw…

The mixed picture we have seen in 2018 may well carry over into the new year, which seems to announce itself with much more uncertainty than a year ago, when the air cargo world looked quite stable.

We at WorldACD wish you all a healthy, happy and successful 2019!