Smartphone shipments out of China behind solid air freight growth

Smartphone shipments out of China behind solid air freight growth

The sale of semi conductors is an important indicator of the state of the air freight business, and sales are booming.

HONG KONG — Apple has released its smartphone data for the fourth quarter of 2014, and while soaring sales of the iPhone 6 doubled its market share in China, the numbers also illustrate the close correlation between the air cargo industry and the constantly evolving mobile phone business.

China is the largest smartphone market where Apple has now secured a 17 percent share. Fast emerging local vendor Xiaomi has a 13 percent share, as does Lenovo, and Samsung has 9 percent.

While the China shipment data was not available, Apple and Samsung each shipped 74.5 million smartphones globally from October through December, according to Strategy Analytics. The total number of smartphones sold around the world in the fourth quarter was 380 million units, with the 2014 total reaching 1.3 billion units.

It is no coincidence that air freight in the last quarter showed a sharp increase in volumes of exports out of China. Smartphones are premium and expensive products that are shipped by air, with most of the production at China factories.

To place the export volumes in context, and taking 170 grams as the average weight of a smartphone (the iPhone 6 Plus is 172g), the phones shipped in the last quarter of 2014 would have been enough to fill 6,000 freighter aircraft. Of course, much of the air freight would have travelled in the bellies of passenger planes, but either way the volume surge produced record throughput at Asia’s two main air cargo hubs.

Hong Kong International Airport handled a throughput of 4.38 million tons last year, up almost 6 percent, while Shanghai Pudong, China’s leading cargo airport, handled a record 1.45 million tons.

Hong Kong Air Cargo Terminals Ltd. (Hactl) is the largest terminal at the airport and it handled 1.8 million tons during 2014. But it was the fourth quarter throughput that produced its strongest quarter of the year, up 4.9 percent on the same period in 2013. The robust growth was largely a result of increasing transshipment of products such as smartphones to overseas markets.

The world’s largest cargo carrying commercial airline, Cathay Pacific, also enjoyed a good year, with volumes buoyed by the launch of new phones and other IT products.

Traffic was driven by strong demand out of Hong Kong and mainland China, particularly on trans-Pacific routes. Two-thirds of the world’s iPhones are produced at Foxconn’s factories in the Henan Province city of Zhengzhou, and Cathay Pacific operates six freighters a week between Zhengzhou and Hong Kong, connecting cargo to the carrier’s global network.

Annual throughput grew 12 percent last year, and Cathay handled 1.72 million tons of cargo during 2014 as the strong second half performance continued into late December. Its new air cargo terminal in Hong Kong handled 1.45 million tons in its first full year of operation.

A bellwether of air freight are semi conductor sales, which are 72 percent correlated with air freight volumes and power wireless communications in smartphones and connected devices such as iPads. According to the Semiconductor Industry Association (SIA), year-to-date sales through November (the latest figures available) were 10 percent higher than they were at the same point in 2013.

While users of smartphones may be frustrated at constant upgrades that eventually force them to purchase new devices, the air freight industry is a direct beneficiary of this approach. As the 2014 profits percolate through airline accounts, cargo executives will be anxiously looking ahead for new opportunities in Asia as they wait for the “next big thing.”

Contact Greg Knowler at gknowler@joc.com and follow him on Twitter: @greg_knowler.