Air cargo’s positive start to the year has buoyed spirits in an industry anxious to find profitability amid weak yields and an excess of capacity.
“There is good cause for measured optimism for the cargo industry’s prospects in 2014,” said Tony Tyler, International Air Transport Association (IATA) director general and CEO.
This optimism springs from an early improvement in the market. The growth in demand for air cargo was a meager 1.4 percent for the whole of 2013, but in the first two months of the year that grew to 3.6 percent, IATA figures show.
March figures for Cathay Pacific Cargo and sister airline Dragonair are now in, and after a poor start to the year the Hong Kong carriers reported a combined rise in March freight volume of almost 14 percent over the same month last year.
“There was a strong pickup in demand out of both Hong Kong and mainland China and we were able to operate close to a full freighter schedule for much of the month along with a number of extra sectors,” said Mark Sutch, general manager of cargo for Cathay Pacific.
Yet even with the greater freight volumes, yields remain depressed, with an excess of belly cargo capacity and fierce competition dragging down rates out of Asia.
Andrew Herdman, director general of the Association of Asia Pacific Airlines (AAPA), said international markets had shown stronger volumes early in the year, but the recovery in air cargo demand remained tentative.
“Although the recent improvement in business conditions and slight pickup in world trade growth [are] encouraging, Asian carriers continue to face multiple competitive challenges that have been pressuring yields and margins across the board,” he said.
The vast majority of the growth in cargo so far this year has been realized by airlines in the Middle East and Europe, which recorded 11.9 percent and 5.5 percent growth respectively compared to the previous February. By contrast, IATA reported that Asia-Pacific carriers grew just 0.1 percent in February compared to a year ago.
Tyler said that as in 2013, the impact of Lunar New Year, which fell on January 31, may have dampened demand in February, but with regional trade growth in recent months improving, he expected stronger air freight growth in the months ahead.
Chinese economic performance, however, may be on the verge of a slowdown, which would restrict trade and freight demand, IATA warned.
The weakening of China’s currency is not helping, either, with China Southern Airlines warning it would likely post a net loss of between $48 million and $56 million for the first quarter because of foreign exchange losses. The RMB has fallen 2.4 percent against the dollar since the start of the year.