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Air cargo markets continue to surprise

AMSTERDAM: August 01, 2017. Air cargo analysts WorldACD says air cargo traffic in June showed no sign of falling off:

"For well over half a year now, we have seen air cargo volumes growing strongly year-over-year (YoY) and US$ yields stopping their 2015-2016 free fall.

"This trend did not show the slightest tendency of tapering off in June, on the contrary. The volume increase year-over-year (YoY) for the month was 10.5 percent, accompanied by an increase in Direct Ton Kilometers of 12 percent, showing that the average distance between origin and destination of shipments continues to increase.

"And yield worldwide, measured in US$, was 7.0 percent higher, a big bonus for airlines and a development we have not been able to report since the recovery of 2010-2011.

"In terms of volume growth, the second quarter of 2017 was the best quarter for the industry in almost seven years.

"The origins Germany and Hong Kong grew most in absolute kilograms. The markets from Turkey to the Middle East & South Asia, from Belgium to Asia Pacific and from Belgium to North America showed the highest volume increase in percentages: 54 percent, 50 percent and 46 percent respectively.

"In general, load factors increased, as capacity growth was clearly lower than the increase in volumes in all regions.

"Whereas the first quarter showed stable YoY yields, Q2 surprised with a remarkable yield improvement YoY of 5.4 percent in US$, and of 8.1 percent in Euros. Yield improvements in Q2 were particularly visible in markets with an origin in Asia Pacific. Yields ex-China grew even harder than those from other countries in the region.

"Interestingly, positive yield and volume developments seemed to go hand in hand: from Asia Pacific to North America, growth of each was around 20 percent, and from Asia Pacific to Europe around 15 percent. A prominent element in the growth of both volumes and yields between Asia and North America was the modest capacity increase...

"The YoY yield performance in Q2 may be explained partly by movements in fuel prices & surcharges: fuel prices were about 10 percent higher YoY. Past experience has taught the air cargo world that yields usually react to fuel price developments with a time delay.

"Since the 2016 fuel prices increased strongly between Q1 and Q2, Q2-yields in 2016 could be said to have been relatively low as the rising fuel prices had not yet been fully factored in. Given the increasing practice of net pricing, more research needs to be done on this subject, however.

"The month of June also showed how air cargo and geopolitics can be intertwined as the transport of perishables to Qatar increased well beyond the overall growth pattern of this sector of the business.

"As a matter of fact, June confirmed the trend we reported earlier, which shows general cargo growing faster than most specific product categories; only pharma grows faster than general cargo. It also confirmed that the average shipment size is growing YoY by more than 8.0 percent in June and by almost 7.0 percent for the first half of the year."

WorldACD Market Data www.worldacd.com

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