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AMSTERDAM: March 01, 2016. Recent headlines in trade magazines make for fairly grim reading: China reports unexpectedly deep export slump in January - export declines point to a significant deterioration in global trade – cargo losses mount – the air cargo business has never been so tough – air cargo needs to adjust to the “new normal of lower growth”.

Coupled with the gloomy general economic forecasts and recent stock market movements, it sure looks as if 2016 is off to a pretty bad start in air cargo.

The first month of the year indeed gave little cause for cheer: year-on-year (YoY) January showed a volume increase worldwide of no more than 0.3 percent. Europe was the exception, just as it was in the second half of last year, with volume growth of more than 5.0 percent outbound and 1.5 percent inbound.

Although Asia-Pacific as a region hardly grew, its business to Europe expanded 8.8 percent and from Europe, 10.6 percent.

Whilst yields normally drop between December and January, this year’s month-on-month (MoM) decrease of 6.6 percent (in US$) was slightly smaller than last year’s. The January US$-yield drop was 16 percent YoY, a figure not compensated for by lower jet fuel prices, even though these prices decreased by around 30 percent YoY. Only Central & South America managed to generate the same YoY yield.

Since an advisor to the Indian government stated last week that the country expects its air cargo industry to grow by over 180 percent in the next 15 years, this is a good moment to see where India stands.

Its growth percentages for the year 2015 are more than double the worldwide average: +4.1 percent outbound, +4.7 percent inbound. And for January 2016 the YoY volume growth is even higher: 4.4 percent and 7.0 percent respectively.

With yields (in US$) moving along with the worldwide changes, one could say that its starting point is good.

The United Kingdom is still the most important outbound market, but its dominant position is dwindling. The top inbound markets of Hong Kong, Germany and China East strengthened their position with double digit growth figures: the latter two even managed over 20 percent YoY growth in January. Importantly, there is a good overall balance between India outbound and inbound.

Outbound business through GSA’s grew in line with the market in 2015, but increased spectacularly in the markets to the Middle East and South Asia. The Top 5 GSA’s increased their market share (among GSA’s) from 60 percent to 70 percent, the Top 10 from 80 percent to 90 percent - making life more difficult for the smaller GSA’s operating in India.

The same could not be said for India’s top forwarders. Their market share was already smaller in India than worldwide, and it decreased further in 2015. Whereas the Top 5 forwarders only lost 0.1 percent market share dropping to 14.5%, the five next biggest forwarders lost a larger part of the market, as their share fell from 10.5 percent to 9.9 percent.

Airlines could take some consolation from the fact that yields realized through the Top 10 held up better than the yields from the smaller forwarders. With the exception of UPS Supply Chain Services, the global forwarders fared less well than the large regional and local forwarders, who showed spectacular volume growth in January. 

- WorldACD Market Data

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