International air cargo rates remained depressed in July as the bearish demand apparent for much of the year continued to dominate markets.
Drewry’s East-West Air Freight Price Index, a weighted average of all-in air freight ‘buy rates’ paid by forwarders to airlines on 21 major East-West routes, stalled last month at the $3.06 per kilogram also recorded in June, the lowest rate since July 2012.
The cause of the depressed rates was evident most in Asia in July, where international volumes carried by Asia-Pacific airlines fell by 2.6 percent year-on-year, according to the Association of Asia Pacific Airlines. Andrew Herdman, AAPA Director General, said the cargo slump ex Asia was primarily due to weak demand from Europe and other key export markets and had now dragged on for two years.
“Asian airlines have been badly affected by the extended slump in the air cargo market, with surplus freighter capacity depressing both rates and aircraft values,” he added.
Freight capacity offered by AAPA members expanded by 1.8 percent last month, resulting in the average international freight load factor falling 2.9 percentage points to just 64.2 percent.
Cathay Pacific Airways saw a 1.9 percent drop in cargo and mail uplifted in July compared to a year earlier, even though capacity increased by 6.6 percent.
Mark Sutch, Cathay Pacific general manager cargo sales and marketing, said demand last month was soft out of many of the airline’s key airfreight markets. “The bright spots in our network were the transpacific lanes and demand on intra-Asia routes, particularly out of Hanoi and Dhaka. Europe and Japan remain two of the weaker markets at the moment,” he added.
However, some bright spots were apparent in Asian cargo markets, although only in comparison with the poor figures posted by most airports and airlines in 2012.
Singapore’s Changi Airport saw cargo handled increase by 1.1 percent last month to 160,000 metric tons, for example. And, according to business consultant firm Frost & Sullivan, freight handled at Indonesia’s airports will reach 1.16 million tons this year, up almost 20 percent compared to 2012.
Demand for FMCG goods across the Indonesian archipelago was bullish in the first half of the year and national carrier Garuda Indonesia and other airlines are investing heavily in their fleets. Garuda is also now considering the purchase of a freighter later this year or early in 2014.
Korea’s Ministry of Land, Transport and Maritime Affairs reported marginal gains in international freight handled at the country’s airports in the first half of 2013, although Korean Air saw declines as passenger rivals offering competitive bellyhold rates continued to win market share on some of its key lanes.
Rising exports and North American traffic saw freight handled at Hong Kong International Airport increase 1.9 percent year-on-year last month, and volumes were also 3.5 percent higher on a rolling 12-month basis through July.
Contact Mike King at email@example.com.