WorldACD: Air cargo pricing stabilises as volumes and capacity retreat

Air cargo tonnages retreated across the board to slide -3% overall from the previous week as a result of a mix of different factors while capacity declined by a more limited -1%. Nevertheless, pricing stabilised, partly driven by rising aviation fuel costs. The latest weekly figures from WorldACD Market Data show chargeable weight in decline around the globe in week 30 (20 to 26 July), led by a -7% week on week (WoW) slump out of Africa and volume from the Asia Pacific region dropping -5%. Europe and the Middle East & South Asia (MESA) region show declines of -2%, while North America and Central & South America (CSA) registered -1% decreases. Comparison of the past two weeks with the previous fortnight (2Wo2W) shows a similar picture, with total chargeable weight down -2%, owing to declines everywhere except North America (+2%), led by drops from Africa (-6%) and Asia Pacific (-3%). While the broad decline may be to some extent a seasonal slowdown similar to a temporary drop in volumes observed in the same period last two years, regional dynamics weighed on traffic developments. The continuing hostilities in the Persian Gulf took a toll on volumes from MESA, which slipped -2% WoW to Europe and -1% to the US. Whereas chargeable weight from South Asia to USA actually increased and volumes to Europe retreated in single-digit percentages WoW, chargeable weight from Dubai to USA and Europe slumped -14%, each. The decline of volume out of Africa (-7%, WoW) played out across the continent, with falling tonnage to Europe accounting for about 50% of the downturn, mainly from North and East Africa, also impacted by disruptions of Red Sea shipping and recent flight disruptions of Middle Eastern carriers. Volumes from Asia Pacific sank 2Wo2W within the region as well as to all other regions except North America (0%). Week on week, intra-Asia Pacific dropped by -7% accounting for almost 60% of the WoW decline in tonnage from the region, while drops of -4% to Europe and -6% to MESA made up 19% and 14% of the WoW decline, respectively. Chargeable weight from Asia Pacific to Europe and USA declined -4% and -1% WoW, respectively. To Europe volumes decreased from all markets except South Korea (+3%) and Vietnam (0%). Japan export volumes show the biggest drop (-17%). Chargeable weight from Hong Kong to Europe slipped another -1%, falling to a -23% decline year on year (YoY). This was likely the result of the impact of Typhoon Noul, which caused the cancellation of some 350 flights at Hong Kong International Airport on 26 July. Furthermore, volumes from mainland China dropped -5% WoW, widening the YoY gap from -8% in week 29 to -10% in week 30, partially caused by the end of the ‘de minimis’ exemption for parcel shipments to the European Union. Buoyed by AI-related traffic, Singapore, South Korea, Taiwan and Vietnam registered WoW growth in volumes to USA, while the other Asia Pacific origins registered declines between -2% (Hong Kong) and -26% (Indonesia). Year on year tonnages were up in double digits from South Korea, Taiwan, China and Vietnam, but down (in single digits) from Indonesia, Thailand, Japan and Hong Kong. Worldwide capacity dropped by -1%, WoW, mainly due to declines from China (-3%) and North East Asia (-2%), most notable ex-HKG (-6%) related to the typhoon. Capacity to and from the Gulf Area fell by -7% due to the most recent escalation between the US and Iran, causing the capacity deficit versus the pre-war level to go from -21% in week 29 to -27% in week 30. After four consecutive weeks of decline pricing stabilized, with the worldwide average rate inching up from US$3.01 in week 29 to US$3.02 in week 30. Week on week rates increased +5% out of Africa and +1% from Asia Pacific and Europe, while sinking -4% from CSA, -2% from MESA and -1% from North America. The stabilization in global average pricing can largely be explained by the rise in aviation fuel cost. Having fallen -20% through June, jet fuel prices started climbing again in early July, triggered by the renewed unrest in the Middle East. Increases over four consecutive weeks have raised the average jet fuel price to $160.06 per barrel on 24 July, according to IATA’s Jet Fuel Price Monitor, which is based on the latest price data from Platts, leading to higher fuel surcharges being applied. For Editorial Inquiries Contact: Editor Matt Driskill at [email protected] For Advertising Inquiries Contact: Head of Sales Sally Passey at [email protected]