Europe air cargo rallies on ocean slot shortage

Europe air cargo rallies on ocean slot shortage

Air France-KLM's cargo traffic rose nearly 6 percent in March.

Europe’s air cargo rally rolls on, with its leading airlines and airports posting solid traffic growth driven by rising exports, surging e-commerce shipment, and the short-term boost from space shortages on container ships on key routes to Asia.

Frankfurt Airport’s freight traffic jumped 9.8 percent in March to just over 205,000 tonnes (225,974 tons), the steepest rise in six years, which drove a 5.8 percent first-quarter increase at Europe’s top cargo hub to 535,764 tonnes.

Amsterdam Schiphol, Europe’s third-largest hub after Paris' Charles de Gaulle, boosted March traffic by 9.5 percent to 153,545 tonnes for 8 percent year-over-year growth in the first quarter to 420,168 tonnes.

London's Heathrow traffic surged almost 13 percent in March, the biggest increase in more than five years, to 148,000 tonnes as Europe’s fourth-ranked cargo hub posted strong growth on routes to Mexico, Brazil, India, and Indonesia.

European airlines, which accounted for half of the increase in global traffic to a five-year high in 2016, are continuing to post strong growth figures and keeping pace with the resurgent Asia-Pacific carriers.

Lufthansa Cargo’s traffic, measured by revenue tonne kilometers, surged 13.3 percent in March; International Airlines Group — the owner of British Airways, Iberia, and Aer Lingus — was up 6.6 percent; and Air France-KLM’s volume was 5.6 percent higher despite the continued reduction in its all-freighter operations.

The traffic rebound, which looks likely to continue through the year, albeit at a more modest pace, will help improve the industry’s battered bottom line — Air France-KLM posted an operating loss of 224 million euros ($240 million) in 2016 and Lufthansa Cargo sank 50 million euros into the red, its first loss in six years.

The mini-boom is being driven by several factors, notably the double-digit growth rate in cross-border e-commerce trade, which depends heavily on air cargo, as “customers in the internet age are demanding almost immediate fulfilment of their orders,” according to the International Air Transport Association (IATA).

High-value specialized cargo is also showing great potential, particularly the transport of temperature-sensitive healthcare goods such as cold chain and biopharma products that are typically shipped by air.

Currently $12 billion is spent worldwide on cold chain biopharma logistics, and this is estimated to rise to $16.7 billion by 2020, IATA says.

European carriers are also benefiting from “local” factors, mainly the continued weakness of the euro, which is boosting export orders, particularly in Germany, coupled with the slump in the pound sterling following the UK’s vote to quit the European Union last June, which has made British products significantly more competitive.

European airlines are also making hay from the temporary shortage of space on container ships heading for Asia after the two new shipping alliances rejigged their networks. IAG attributed the 23 percent surge in its Europe-Asia traffic — especially fashion products, leather goods, fresh fish, and spare parts — in the first two months of the year to the container capacity crunch.

The European — and global — air cargo rally carries a caveat. “While there are signs of stronger world trade, concerns over the current protectionist rhetoric are still very real,” said Alexandre de Juniac, IATA’s director general.   

Contact Bruce Barnard at