Will 2018 be Another Strong Year?

If one had asked many in the trade a year ago what they would give as a prognosis for air cargo for 2017 – most would have probably re-frained from being optimistic or maybe might have
even given a doom & gloom picture which was apparent in the previous years. This year has shown again how air cargo can bounce back from what was seen as an almost desperate
situation.

 

First nine months were a boom
2017 got off to a great start for the air cargo business. We saw year-on-year growth rates of between 12% – 13% during the early months. These
were exceptional, but ran back into the 4% – 5% area during the past months. The latter figure is seen as being a more realistic growth rate and far better than the previous years. It is expected
that by the end of the year the annual growth rate will stay around 6% – 7%. A good result which gives many airlines more financial breathing space and at the end of the day much needed better
revenues, but still too low on yields.
There are still problem areas such as Latin America with slow or stagnating growth. However, most areas have shown notable increases are led by the Asia Pacific region along with Europe and
Africa. Asia Pacific even continues showing double-digit increases right up until and through September.

Will the boom hold through 2018?
Many are confident that the air cargo industry will also experience a good 2018. However, some say that growth will drop compared to this year, but will stay attractive for the shippers, agents,
handlers and carriers as a whole. There are also skeptics who are worried about international escalations, particularly in the Far East.
But – let’s go from the fact that the world stays somewhat sane – what future then for air cargo in 2018?
Worldwide demand is expected to continue growing and the traditional ‘high seasons’ might turn into a ’year-round seasonal demand.’ A nice case scenario, and one which may well come about.
Capacity is not growing alongside the present and expected demand as many carriers having cut back their freighter fleets, partly or altogether. Belly capacity remains plentiful, but there are
some regions which will definitely need more. This could cause headaches.
The key it seems – remains the Asia Pacific routes which contribute around 40% of the world’s air cargo traffic. The global e-commerce machine is presently only running in 2nd gear. Imagine it
steps up to third gear next year and the increase in cargo that may well bring. China’s e-commerce giants have until now concentrated on their domestic market and have used the past couple of
years in tuning their logistical operations to a stage where they could easily go international very soon.

Good news for the airlines?
Less capacity usually can mean higher rates, better yields and also stronger full charter rates to shippers. Will airlines collectively look at increasing prices dramatically in order to make up
for lost revenues and gear themselves towards a stronger future?
A touchy subject among carriers who are still feeling dominated by shipper’s reluctance to pay more.
Despite the above, 2018 looks like becoming a stable year for the air cargo industry.

John Mc Donagh

Source: Cargoforwarder

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