April 2018: +4% YoY - high tech & pharma main growth engines

May 31, 2018

The worldwide air cargo yield went up to a level of USD 1.93 in April 2018, 2% above March 2018, and 16% higher than in April 2017. Measured in Euro's, the month-over-month (MoM) yield increased by 2% as well, but year-over-year (YoY) the increase was 1.5% only.

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

As we empasized last month, the first three months of 2018 should be viewed together rather than individually, given the 'monthly distortion' - effect of the timing of Chinese New Year. Therefore, a month-over-month comparison between April and March 2018 makes little sense. The YoY growth of 4% in April should rather be seen against the backdrop of (1) the 4.8% growth in Q1, and (2) the strong growth we saw last year in general. Seen in that light, the 4% increase in April, though lower than in Q1, still points to serious business growth in air cargo.

Of the top-20 markets in the world, 8 performed better than the worldwide average of 4% (April YoY), 12 remained below the 4% growth mark. But the spread was large:

The origin Africa contracted again (-2.1% YoY in April), albeit less than in Q1, but the origins North America (+8.6% YoY) and Central & South America (+10.5%) continued to dominate the growth tables. Argentina deserves special mention this month: in outgoing business 26.5% growth YoY, largely thanks to more than doubling its business to Europe. In incoming business 30.9% growth, largely because of a large increase in volumes from North America.

So far, 2018 tells us the following:

Average distance still growing but at a lower pace
DTK (Direct Ton Kilometers) increased with 5.6% against an increase of 4.6% in kilograms, showing that the average distance per shipment flown continues to grow (but by a smaller percentage than a year ago).

Pharmaceutical products & high-tech remain growth engines in specialised cargo
Pharmaceuticals transport increased with 17% YoY, high-tech with 11%. Perishables, the largest category of specialised cargo, is growing less than average (4%).

Different regions show (very) different growth patterns
Asia Pacific, the largest origin area, grows less than average YoY (3.7% vs 4.6% ww), with larger business growth to Europe +4.8%) and much less growth to North America (2.1%). The same goes for Europe, the number 2 origin area (3.5% YoY), but there the growth is mainly to North America (4.6%), and much less to Asia Pacific (+1.4%).
North America, the third largest origin area, shows a large YoY growth of 8%, mainly thanks to similar percentage growth to both Asia Pacific and Europe.

Among these areas, Europe showed the largest growth in incoming business (+6.8%), whilst imports into Asia Pacific and North America remained below the worldwide 4.6%.

With the exception of growing transatlantic business from Europe, could it be that all these trends are nicely in line with economic theory? After all, the USD has been relatively cheap in this period and the Euro relatively expensive. One would thus expect North America to export more, and Europe to import more. With the surge of the USD since early May, we may well be able to already "test" this position in one month's time, when the May-results will be in.