Air cargo slump drags down Hong Kong, Cathay volume

Air cargo slump drags down Hong Kong, Cathay volume

HONG KONG — Hong Kong’s airport and its leading airline saw their hopes for a strong air freight finish to the year dashed as November figures fell back into negative growth that has gripped the world’s busiest airport for most of the year.

November cargo volumes were 407,000 tons, a drop of 3.1 percent compared to the same month last year, while Cathay Pacific saw its tonnage in the month falling 3 percent to 160,120 tons, data from the airline and Hong Kong International Airport has shown.

It was the first time since January 2014 that the carrier has recorded a year-over-year fall in cargo, a sector that delivers close to a quarter of its annual revenue, even though the Cathay Pacific Cargo Terminal recorded its highest monthly throughput since starting operations.

“We entered the traditional peak period for air freight in November, but overall demand fell short of our original expectations,” said Mark Sutch, Cathay Pacific general manager cargo sales and marketing.

“We saw a decline in the tonnage carried compared to the same month last year, while yield fell short of expected peak-season levels due to an excess of capacity in the market. On the positive side, we saw good demand on trans-Pacific routes, which remains our key area of strength, and also into and out of India.”

Air freight throughput at Hong Kong airport this year is closely following 2014 tonnage, with the 11-month tally just 2,000 tons more than the January-November handle. The 3.989 million tons of air freight handled so far this year is a fraction of a percent higher than last year when it handled 3.987 million tons up until the end of November.

To equal last year’s throughput, Hong Kong airport’s terminals will have to see 387,000 tons of cargo in December, exactly the same amount handled in the same month last year, but unlikely in the current air cargo slump.

Year-over-year monthly comparisons at the airport were negative from March to August, with marginal growth in September and October before November cargo volumes fell.

The decline in cargo was mainly due to a 6 percent decline in transshipment and a 4 percent drop in imports compared to last November, with the most significant fall in tonnage coming from key trading regions such as China and Southeast Asia, according to an HKIA release.

But the air cargo blues are not being sung to the north. The largest cargo operator in Shanghai, Shanghai Pudong International Airport Cargo Terminal Ltd. (Pactl) is on track to set a new cargo throughput record.

During the first 11 months of the year, tonnage grew 6.8 percent, with 1.46 million tons crossing its busy cargo bays. The Sino-German joint venture handled 1.5 million tons for the first time in 2014 and should easily slide past that figure in the final months of the year.

Pactl’s domestic cargo volume grew by 8.47 percent year-over-year to 94,707 tons from January to November, while its international cargo volumes rose by 6.71 percent to 1.36 tons. Imports increased by 9.08 percent to 590,669 tons, while exports grew by 5.33 percent to 867,594 tons.

“Even though growth rates have been stronger in the past, I can still see a positive trend in our business and this will almost certainly enable us to set another record for freight volumes in 2015,” said Lutz Grzegorz, vice president of Pactl.

But even as Pactl gets the bubbly ready to pop at midnight on Dec. 31, the prognosis for the air cargo industry into the New Year is not reassuring. Industry associations are predicting a difficult start to the year as global trade growth slows, a position supported by analysts.

“We do not see any near-term recovery in the air freight market and expect more yield pressure,” according to a note by Daiwa Securities.

Contact Greg Knowler at greg.knowler@ihs.com and follow him on Twitter: @greg_knowler.