THE 2018 peak air cargo season proved a disappointment and volumes even fell between October and November, usually the busiest months.
According to WorldACD, the drop meant November's volumes were down 1.4 per cent year on year and two per cent lower than from October.
The analyst noted, however, that the yield jump from October to November was larger than other month-on-month increases throughout the year, with airline revenues, measured in US dollars, up two per cent on the year and 1.8 per cent month on month, reported London's The Loadstar.
New consultancy Hedge & Associates supported this viewpoint. Its principal Alan Hedge noted: 'Tight capacity on some lanes has been welcome but global air cargo capacity growth has been outpacing demand growth for months now, so when the numbers come in, I expect we're not going to see much of an increase over the 2017 peak.'
He noted that while rates were up, it did not all go to airlines' bottom lines. 'High peak transpac freight rates in November 2018 of over US$5/kilogramme were up 11 per cent over 2017 but Brent crude was up 26 per cent year on year, so much of the increase in rates did not make it to carriers' bottom lines.
'However, in early November fuel prices began to fall and for December the US Jet A benchmark was 12 per cent lower than in November.'
Yet: 'November showed a small increase in (China and Hong Kong to the US) over October (up one per cent), the year-on-year figures showed a drop of almost five per cent. Combine this with a considerable drop in the opposite direction, US to China (minus six per cent MoM and minus eight per cent YoY), and we find that the overall market between these two countries fell by almost six per cent YoY and by one per cent MoM.
'November was the first month since the trade war started that the year-on-year volume change for both directions was negative. It goes for both China and the US that their performance to the rest of the world is much better than their performance to the territory of their trade war adversary.'
Elsewhere, noted WorldACD, Asia Pacific to Europe saw gains of 7.2 per cent month on month, and exports from Africa (up 4.9 per cent) and Asia Pacific, up 0.5 per cent, also grew. In sharp contrast, the Middle East and South Asia, along with North America, saw month-on-month declines to all regions.
According to Mr Hedge, 2019 looks like a mixed bag: 'The good news is that trade tensions between the US and China seem to be relaxing slightly (or at least not worsening), with China's unilateral temporary move to lower import tariffs on autos and the US delay in implementing a new round of tariffs on Chinese exports following the meeting of the US and Chinese Presidents at the G20 summit in Buenos Aires.
'It also appears that 2018's strengthening dollar has partially offset the effect of US tariffs.'
However, he warned of the likelihood of continued 'erratic' trade actions from the US, the slowdown of China's GDP growth, the fading of the tax stimulus from the US economy and the impact of the government shutdown, which could shave half a percentage point off US GDP growth in the first quarter and volatile stock markets. In Europe, a messy Brexit is expected to damage the economy.
Last month also saw a majority of US chief financial officers predicting a recession this year or next, with economist Peter Schiff noting it would be worse than the so-called Great Depression of the 1930s.
WORLD SHIPPING
According to WorldACD, the drop meant November's volumes were down 1.4 per cent year on year and two per cent lower than from October.
The analyst noted, however, that the yield jump from October to November was larger than other month-on-month increases throughout the year, with airline revenues, measured in US dollars, up two per cent on the year and 1.8 per cent month on month, reported London's The Loadstar.
New consultancy Hedge & Associates supported this viewpoint. Its principal Alan Hedge noted: 'Tight capacity on some lanes has been welcome but global air cargo capacity growth has been outpacing demand growth for months now, so when the numbers come in, I expect we're not going to see much of an increase over the 2017 peak.'
He noted that while rates were up, it did not all go to airlines' bottom lines. 'High peak transpac freight rates in November 2018 of over US$5/kilogramme were up 11 per cent over 2017 but Brent crude was up 26 per cent year on year, so much of the increase in rates did not make it to carriers' bottom lines.
'However, in early November fuel prices began to fall and for December the US Jet A benchmark was 12 per cent lower than in November.'
Yet: 'November showed a small increase in (China and Hong Kong to the US) over October (up one per cent), the year-on-year figures showed a drop of almost five per cent. Combine this with a considerable drop in the opposite direction, US to China (minus six per cent MoM and minus eight per cent YoY), and we find that the overall market between these two countries fell by almost six per cent YoY and by one per cent MoM.
'November was the first month since the trade war started that the year-on-year volume change for both directions was negative. It goes for both China and the US that their performance to the rest of the world is much better than their performance to the territory of their trade war adversary.'
Elsewhere, noted WorldACD, Asia Pacific to Europe saw gains of 7.2 per cent month on month, and exports from Africa (up 4.9 per cent) and Asia Pacific, up 0.5 per cent, also grew. In sharp contrast, the Middle East and South Asia, along with North America, saw month-on-month declines to all regions.
According to Mr Hedge, 2019 looks like a mixed bag: 'The good news is that trade tensions between the US and China seem to be relaxing slightly (or at least not worsening), with China's unilateral temporary move to lower import tariffs on autos and the US delay in implementing a new round of tariffs on Chinese exports following the meeting of the US and Chinese Presidents at the G20 summit in Buenos Aires.
'It also appears that 2018's strengthening dollar has partially offset the effect of US tariffs.'
However, he warned of the likelihood of continued 'erratic' trade actions from the US, the slowdown of China's GDP growth, the fading of the tax stimulus from the US economy and the impact of the government shutdown, which could shave half a percentage point off US GDP growth in the first quarter and volatile stock markets. In Europe, a messy Brexit is expected to damage the economy.
Last month also saw a majority of US chief financial officers predicting a recession this year or next, with economist Peter Schiff noting it would be worse than the so-called Great Depression of the 1930s.
WORLD SHIPPING