2JanJJa May shows signs of weakening demand - perishables continue to occupy bright spots

After four months of reasonably satisfactory - albeit quite random - growth, the month of May brought only limited increases in air cargo volumes. Worldwide YoY growth was a meager 1.8%, fueling suspicions that air cargo may have to face some adverse market conditions once again. Worldwide yield (in USD) was down by 2% compared to April. Further analysis is required to find out whether this would not - on balance - be good news for airlines. Yet, it may be hard to establish the impact of lower fuel prices and shifts to all-in pricing. At this stage, we state cautiously that there has again been a slight increase in yields excluding charges.

The areas Europe and North America, volume-wise among the best performing areas only one month ago, were the laggards this time around, together with Central & South America (C&S Am), an area that has been suffering for a while. The growth in May came specifically from Africa and the Middle East & South Asia (MESA), with YoY increases of 8% and 5.5% respectively. MESA was also the fastest growing destination. Interestingly, the Americas did best when it comes to yield comparisons with May 2014…

As has been the case for a while, perishables (PER) and pharmaceuticals were the engines of growth again, the former playing a much larger role than the latter in terms of volumes. Worldwide growth in May was completely driven by these two categories with growth figures of 7% (PER) and 13%. Although MESA stood out with a 24% PER growth between South Asia and the Gulf Area, the importance of perishables was made particularly clear by comparing Africa with C&S Am.

Both origin areas are heavily dependent on PER-exports for their total air cargo performance, more so than any other region. Their YoY figures tell the story: the PER growth ex Africa (+12.2%) made it the best performing area overall, whilst the decrease in the same product category ex C&S Am (-6.8%) made it the weakest.

Although Europe easily remained the top destination ex Africa, destination MESA grows faster - in absolute terms the PER growth to MESA reached the same level as the one to Europe. From C&S Am, the top two PER destinations North America and Europe suffered, whilst business to other destination regions flourished! Two Latin American powerhouses, Colombia and Ecuador, slightly increased their PER exports by air, but all other countries were heavily hit: their YoY decrease ranged from minus 10% to minus 33%...

In other parts of the world, Australia, India, Norway and the Netherlands did best in terms of PER volume growth YoY. With the exception of Kenya – Netherlands, most of the large PER-markets did not escape the prevailing yield declines. But a number of smaller O&D’s chalked up yield improvements.

Lastly, a few figures about the role perishables play for different groups of players in the air cargo market. North American and MESA carriers get a much higher % of their total business (around 20%) from PER than their Asian and European colleagues. Whilst the Top-20 forwarders have a worldwide market share of 43%, they have a share of only 22% in perishables.