January 2020: only the prelude to an extraordinary Q1 2020

February 28, 2020

January 2020 at a glance:
Total Chargeable Weight: -5.8% year-over-year (YoY); -9.7% month-over-month (MoM).
General cargo -9% YoY, Special cargo 0.5% YoY.
Direct Ton Kilometers (DTK’s): -5.6%
Yield stood at USD 1.74 (-5.6% YoY, -3.5% MoM).  The yield in EUR stood at 1.56.
The cargo load factor dropped by 1.9 percentage-points YoY, and by 4.3 MoM.
High-Tech & Other Vulnerable Goods increased by +4.6% YoY, whilst Pharma & Temperature Controlled Goods rose by +6.5% YoY. In perishables, meat did best (+6.7% YoY), followed by Flowers (+2.2%), but all other categories declined (-2.7%).

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

At the time of writing this newsletter, it had become very clear that the first quarter of 2020 (and quite possibly the months beyond) will turn out to be an extraordinary period for the world and for world trade, and thus for air cargo. The corona-virus leaves traces in almost all aspects of life, not just in China but increasingly elsewhere as well. Supply chains have been disrupted around the world, to varying degrees, marking how much we have come to rely on Chinese production. The first reliable figures on how individual markets around the world will be affected, will hopefully be out by mid-March when detailed February-data on air cargo volumes and yields will have been reported.

With Chinese New Year (CNY) this year at the end of January (CNY-2019 came in February), it was to be expected that the YoY figures for January would be negative. Worldwide, the month saw a decrease in air cargo weight of almost 6%, accompanied by a drop in yield (measured in USD) of 5.6%. As for Asia, the traffic pattern for China around CNY always shows an earlier slow-down in imports than in exports. It was no surprise, therefore, that traffic to Asia Pacific fell by 13.6% YoY in January, whilst exports dropped by 8.0%. Latin America was the only region showing growth in air cargo exports (+2.7%), whilst the destinations Africa and Middle East & South Asia (MESA) were the only regions that saw imports by air increase YoY (3.1% and 0.6% respectively). In spite of the poor cargo results for the airline sector as a whole, two of the larger and three of the smaller sized airlines in our extensive database, chalked up double-digit growth!

Clearly, we expect the short term figures for air cargo (beginning with February!) to be shocking. So, before being able to report them, we might as well look at some long-term trends in markets worldwide. Since 2010, WorldACD records the sector’s growth in more than 3,500 markets on various geographical levels: country-to-country, country-to-region, region-to-region, etc. Whilst the worldwide index (with base year 2010 = 100) crept up to 129 in 2018, it fell back to 123 in 2019. In other words, air cargo in 2019 was 23% bigger than in 2010. Obviously, the picture per country is quite different. In fourteen countries, air cargo exports more than doubled: not surprisingly, Vietnam and key regions in China belong to this group, but so do Cambodia and Myanmar. Africa is represented with Morocco, Tunisia, Uganda and Nigeria. We also find the Maldives, Norway, Poland, Turkey, Jordan, Luxembourg and Honduras in this illustrious group.