AIRPORT ANALYSIS: Top cargo airports report

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After an exceptionally strong start to the year that was buoyed by the US west coast ports disruptions, volumes have been relatively flat for many airports around the world, writes Will Waters

Airports have reported relatively weak cargo growth so far in 2015, particularly compared to passenger traffic that grew by around 6% in the first nine months of 2015. In contrast, an emerging market slowdown led by China has resulted in more subdued growth in air freight volumes across most of the world’s markets this year. Total global air freight volumes increased by 2.3% across the globe for the first three quarters of 2015, according to Airports Council International (ACI)’s FreightFlash statistics, which are based on a significant sample of airports that provide regular monthly reports to ACI, representing around 70% of total freight traffic worldwide. Of that year-to-date freight growth, international tonnages increased by around 2.5%, year on year, and domestic by 2%.

The year started exceptionally strongly, when air freight volumes were buoyed by traffic shifted from sea freight as a result of the US west coast ports disruptions and congestion, continuing the strong end of year experienced in 2014. For the first two months of 2015, total air freight volumes at ACI-reporting airports were up more than 6%, year on year, and more than 8% for international freight. However, since then the market has flattened off with average growth below 2%, year on year, in most markets, rising just 1.4% in September, for example.

Hong Kong (HKG), the world’s biggest international freight hub, reported modest gains of 1.1% in September and major Chinese hubs such as Shanghai (PVG) and Beijing (PEK) were flat with respect to year-over-year changes in volumes. The Asia-Pacific region as a whole experienced a slight gain of 0.5% in air freight traffic in September.

But thanks to stronger economic fundamentals in advanced economies, North American air freight hubs achieved the greatest gains in volumes in September, ACI reports. With growth of 4.4% in air freight volumes, much of the cargo increases in the region can be attributed to the boost in internal domestic demand. Whereas North America’s international freight inched up by only 0.9%, the region’s domestic air freight market grew by 6.9% year over year in September. Memphis (MEM), FedEx’s main global hub, and Louisville (SDF), the UPS hub, experienced an increase of 5.7% and 6.6% respectively in terms of year-over-year growth in volumes.

Unspectacular picture
Other highlights from around the world reveal a mixed but unspectacular picture, with volumes in many cases flat. In the first nine months of this year, Hong Kong handled 3.2 million tonnes of cargo, representing growth 0.2% over the same period last year. On a rolling 12-month basis, cargo throughput grew by 1.3% to 4.4 million tonnes.

But despite this flat performance this year, Hong Kong looks likely to retain its position as the world’s busiest cargo airport. Volumes through the world’s second largest cargo airport, Memphis International, rose by just over 1% in the first nine months of 2015, to 3.205 million tonnes.

With strong parcel volumes forecast this Christmas peak season for its biggest customer, FedEx, Memphis could make up some ground – although Hong Kong was also seeing strong volumes in late October and early November, and so looks likely to hang on to the top spot.

Meanwhile, after overtaking Heathrow last year to become the world’s busiest international passenger airport, the Middle East’s biggest cargo airport, Dubai International has recorded relatively weak cargo growth this year. Cargo traffic for the nine months to 30 September totalled 1,853,130 tonnes, up 2.6% from the 1,806,449 tonnes shipped during the first nine months last year.

However, this reflects the transfer of freighter activities from DBX to sister airport Al Maktoum International – Dubai World Central (DWC), which has seen cargo volumes continue to boom. Following growth of more than 200% last year as Emirates moved its freighters there from DBX last May, DWC recorded further year-on-year growth of 42% in the first half of 2015 to 443,012 tonnes.

Volumes at South-East Asia’s biggest cargo airport, Singapore Changi, were also flat this year. In the first nine months of 2015, cargo shipments held steady at 1.37 million tonnes (1.366m tonnes, -0.2%), despite a strong performance in September (+4.9%).

Meanwhile, Europe’s biggest cargo airport, Frankfurt, saw its cargo volumes (airfreight + airmail, excluding transit cargo) decrease by 2.4% to about 1.56 million tonnes in the first nine months of 2015, mainly reflecting the overall weak global trade environment and a slowdown in emerging economies. Frankfurt Airport handled around 2.2 million tonnes of cargo in 2014.

And North America’s busiest international cargo airport, Miami, also recorded flat cargo volumes in the first nine months, rising just 0.16%, year on year, to 1.607 million tonnes.

While there are some exceptions this year, for example Abu Dhabi recording growth of 7.2% in the first nine months of 2015 to 621,000 tonnes, on the whole 2015 has brought relatively disappointing growth in comparison with 2014.

Air cargo data specialist WorldACD described 2015 as “a year of modest volume growth, judging by the first three quarters of the year”. Using worldwide data from more than 50 mostly large airlines and more than 16,000 freight forwarding agents, it estimated that global air cargo volumes increased, year on year, by 4.2% in Q1, by 2.8% in Q2 and by a mere 1.2% in Q3, making for a year-to-date (YTD) figure of +2.7%. At country level, Australia, Bangladesh and Vietnam stand out with a YTD volume growth of more than 20%, it added.

But it said cargo revenues earned by airlines were a different story, WorldACD noted, in part reflecting falling lower fuel prices and hence fuel surcharge levels. Expressed in US$ or CNY, WorldACD noted a YoY decrease of 12% and 10%, respectively in the first three quarters. However, the same revenues expressed in JPY or EUR show an increase of 4% and 8%, respectively, WorldACD noted, as a result of the US dollar appreciating by about 15% against a basket of currencies over the past 12 months.

IATA estimated that total global air freight traffic, measured as Freight Tonne Kilometres (FTKs), was up by 2.4% , year on year, in the nine months to 30 September, while total available freight capacity (Available Freight Tonne Kilometres or ATKs) rise by 5.5%.

Discussing the market in September, IATA’s Director General and CEO Tony Tyler said the weakness in air cargo markets largely tracks anaemic growth in trade. “Although slightly improved from August, the global trend is fragile, and the improvement is narrowly based,” he noted.

“Growth reported by European carriers reflects positive trends in trade with Central and Eastern European economies as well as a general improvement in manufacturing in the Eurozone. But the largest air cargo region, Asia-Pacific, was only just in positive territory, held down by weak regional trade.”

Commenting on the outlook, IATA said: “Some of the conditions that led to the decline in world trade this year – a combination of weaker than expected global economic growth, particularly in emerging markets, as well as shifts toward the domestic market in China – are persisting. The September data suggests that improvements in some regions could counter further declines in air cargo demand. But this is narrowly based and the demand backdrop for air cargo remains fragile.”

As this issue of CAAS was going to press, airlines and freight forwarders were reporting a surge in demand during October and November from Asia’s major cargo airports to key markets such as Europe and the US, thanks to new tech product launches, particularly from Apple. However, the surge was understood to be caused by short-term, seasonal factors and was expected to die down by early December. And it was also unclear whether the spike in demand represented significant year-on-year growth, with shortages of capacity partly reflecting temporary restrictions placed on charter flights operating out of China’s most congested airports.