With much discussion in the industry over the lousy start of 2019 for air cargo, WorldACD Market Data highlights that every year the first quarter is impacted by the Lunar New Year (LNY), particularly the very large air cargo market of Asia. But the cargo analytics group warns that given the developments so far, it looks unlikely that many will reach forecast full year 2019 growth of 2-3 per cent.
Jan/Feb 2019 were still better than the first two months of both 2016 and 2017. Yet, assuming that the decrease in world air cargo in Q1 2019 will come to around -3.0 per cent, the emerging trend looks quite worrisome for the sector.” – WorldACD
The negative effect of LNY on business activity usually manifests itself from one week before – mainly inbound China & Hong Kong – until 3-4 weeks after the first day of the holiday, mainly on the outbound.
This year, the date was 5 February, meaning that the month of February absorbed almost all of the LNY-impact, says WorldACD. The full effect can safely be gleaned from the combined Jan/Feb data, it adds. Because of the timing in 2018, the effect lasted through the first week of March.
The Asia Pacific took the largest beating in the first two months of 2019 with outgoing volumes down YoY by 6.8 per cent, incoming down by 6.1 per cent, against the backdrop of a 3.6 per cent worldwide decrease.
All other regions also suffered in incoming traffic, with YoY percentages ranging from -5.0 per cent for Central & South America to -0.6 per cent for North America.
In YoY outgoing business, performances ranged from +2.5 per cent for Africa to -3.8 per cent for North America. Looking at the individual months, January showed a lull in the business to Asia Pacific (with a commensurate drop in outgoing business from the origins Europe and North America).
But in February it was Asia Pacific’s outgoing business that suffered most, particularly to the destinations Europe and North America. “The usual LNY-dip in business from China & Hong Kong seemed to last longer this year,” WorldACD says.
The data analytics company highlights, however, that in fact, Jan/Feb 2019 were still better than the first two months of both 2016 and 2017. “Yet, assuming that the decrease in world air cargo in Q1 2019 will come to around 3.0 per cent, the emerging trend looks quite worrisome for the sector. Looking at the developments quarter by quarter from last year:
• Q1 2018: +5.0 per cent YoY
• Q2 2018: +3.0 per cent YoY
• Q3 2018: +1.0 per cent YoY
• Q4 2018: -1.0 per cent YoY
• Q1 2019: -3.0 per cent YoY
“At this moment in time, it seems harder and harder to achieve the 2-3 per cent growth predicted for the full year 2019 by some of the industry players,” WorldACD warns.
Of the top-25 markets, only five showed volume growth YoY in Jan/Feb – the UK, Australia, Kenya, Vietnam and Ecuador. For a number of countries, volume growth above 3.0 per cent seems to be within grasp.
Of the 100 largest origin countries, 31 showed a more than 3.0 per cent YoY volume growth in the first two months of the year, seven of which also managed to get a yield increase in USD. Apart from Turkey, none of these seven belonged to the top-30 markets, however.
In revenues (measured in USD), 30 countries registered more than 3.0 per cent growth YoY in outgoing air cargo, WorldACD says. Among the larger origin countries, Mexico, Ethiopia, Chile, Norway and Turkey gained 10 per cent or more.
The same was true for a number of smaller origins, notably Costa Rica, Morocco and Cambodia. “In other words, whilst overall expectations for 2019 may not be very impressive, a number of individual countries are likely to buck the trend.”