Air cargo volumes rise as yields remain a challenge

GENEVA: April 20, 2017. IATA reports a slowing of air cargo volumes to a 1.3 percent rise in the three months to February 2017, compared to 2.3 percent and 3.5 percent for the preceding two quarters.

Citing an 8.2 percent increase in the 12 months to February, the organization says this reflects an upturn in global economic and trade conditions, with business surveys pointing to another quarter of "robust" growth in the second quarter of 2017.

"In the past, this has tended to occur at the start of upturns in the economic cycle," according to IATA economist David Oxley.

AF KLM Cargo "Cargo throughput has increased at double-digit annual paces at a handful of key freight airports at the start of 2017, mainly in Asia. By contrast, growth in cargo in the Middle East has been weaker, he added.

According to Kuehne + Nagel CEO Detlef Trefzger a 15.5 percent increase in 2017 first quarter airfreight traffic to 350,000 tons reflects the IATA results, if not its conclusion that "the downward trend in freight yields has stabilized".

"This increase in volume and productivity as well as cost control mitigated the ongoing pressure on margins," he observed.

Panalpina CEO Stefan Karlen said that while first quarter airfreight volume rose eight percent year-on-year, "as expected, margins remained under pressure." However the company experienced an upturn in profitability for its air cargo business unit compared to the last quarter of 2016, suggesting a slow recovery in yields.

Another indicator that volumes have risen even if yields haven't, Air France-KLM reported a 0.6 percent increase in freight capacity during the quarter; a 5.6 percent increase in flown revenue and a 3.0 percent rise in load factor to 63.4 percent.

"While the challenging market dynamics are expected to continue throughout 2017, we are well positioned in the market and cautiously optimistic that we can keep up the strong volume growth in airfreight," continued Karlen. "In a market environment where rates are currently going up instead of down as last year, we also expect to make progress in yield management," he said.

Back in January, IATA surveyed airline cargo heads who reported a "positive" outlook for air cargo demand in 2017 although nearly 66 percent of respondents said they didn't expect yields to show much improvement during the year.