August 2018: minimal growth for 3rd month in a row & how to read market data about India

September 30, 2018

The worldwide air cargo yield remained stable as it stood at USD 1.89 in August 2018, 10% higher than in August 2017. Measured in Euro's, the worldwide yield increased by 13% year-over-year (YoY).

(See for more yield developments)

Our story is in danger of becoming monotonous: with a year-over-year increase of 0.6%, August was the third month in a row showing minimal growth in worldwide air cargo volumes.  The small shift towards longer haul markets (which we reported on earlier) also continued: growth in the relevant measure (Direct Ton Kilometers, +1.6%) was again higher than volume growth (+0.6%). Whenever DTK's growth is higher than volume growth, long  haul markets grow - on average - faster than short haul markets.
This is why WorldACD prefers reporting DTK-changes over reporting FTK-changes: the latter measure captures both market changes and changes in purely operational patterns, in one single percentage, and is thus less indicative of actual market changes than the combined figures on volumes and DTK's.

The regional YoY volume figures for August hardly changed from our previous monthly report. Volumes from the origins Africa and Europe again contracted YoY (this time -7.1% resp. -1.5%), but they were joined this time by the origin MESA (Middle East and South Asia), for which we recorded a 2.9% drop YoY. Asia Pacific and North America grew a bit more than they did in July: this month they registered YoY growth of 2% resp. 1.6%. Latin America continues to be the positive outlier among the origins: +8.8% YoY. Likewise, Europe remains the best performing destination region with a YoY volume growth in August of 2.8%. The destinations Asia Pacific and North America grew at about half that pace.

As regards yield performance YoY in USD, the origins Asia Pacific and Latin America scored highest, with 11.6% and 11.4% respectively. Yields ex Europe, measured in EUR, increased by 11.2%.

Reading daily about (the possibility of further) trade wars, we looked at the period January-August to establish a basis for possible future changes in air cargo flows to and from the various regions. So far, we noticed the following YoY trends.
Africa shows the largest growth gap between incoming volumes (+3.8%) and outgoing volumes (-4.5%), thus increasing the existing imbalance between north- and southbound cargo. Latin America showed an export growth of 11.5% and an import growth of 4 %. Asia Pacific growth was approximately the same in incoming and outgoing traffic. MESA and North America showed the same pattern (exports growing by 2 % - points more than imports), whilst Europe's exports grew much less than its imports (+1.8% vs +5.5%).

Interestingly, in the regions Asia Pacific and MESA, the largest contributors, viz. China, Hong Kong and India, each showed negative growth in the year so far. India, by now the sixth largest air cargo market in the world, makes exports by air to the following main markets: the USA (16.9% share of India's total air cargo exports), the UK (9.3% share), Germany (8.4% share), the United Arab Emirates (5.1% share), Qatar (4.2% share), and Saudi Arabia (4.1% share).

There are two striking points to be made about India's top air cargo export markets:
(1) the YoY growth percentages are very 'erratic', ranging from -20.2% to the UAE to +8.6% to Germany;
(2) the export market shares given by WorldACD are completely different from those recently published by IATA, which calls the UAE "India's largest cargo market (30%)". As shown above, WorldACD calculates the UAE-share at 5.1%. One might well wonder how two large data providers would come to such very different conclusions.
The reason? WorldACD data are based on Air Way Bill information, showing origin and final destination of each shipment, whilst the IATA data could only be based on operational data. For, although carriers from the UAE play an important role in the transport of India's air cargo exports, that does not mean that the country UAE would be the final destination for 30% of air cargo originating in India.