Increase in air freight rate in July despite market slowdown

Air freight rates are increasing since July this year irrespective of market slowdown.

Generally with market slowdown the air freight rates also show decline but not this year as it seems that major cargo hubs are under pressure based on available cargo handling.

As per below TAC index the prices on Hong Kong to North America increased by 16% in July.

Similarly for Hong Kong to Europe the prices increased by 23% 

The forward curve prepared by FIS Invester says “Air Cargo rates have continued to grow throughout July and look to continue to rise, resulting in a reluctance of airlines to commit their space for quarter four early,” FIS’ Nicola Hughes said.

“This is in the hope that they will achieve greater rates through the spot market at a later date. Leading shippers and freight forwarders to look for smarter ways to secure capacity in an environment where time to market is critical.”

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European airports record growth in H1 2015, but only just

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European airports just managed to drag cargo volumes into positive growth for the first half of the year thanks to improved performance in June.
Figures from the Airports Council International (ACI) Europe show that freight volumes for the first half of the year increased by 0.5% against a year earlier.
The organisation was not too optimistic for the rest of the year.
ACI Europe director general Olivier Jankovec said: "For freight, the situation in Russia as well as slower growth in emerging markets is likely to keep constraining traffic performance."
The increase came as a result of an improvement in June when cargo volumes increased by 3% year on year.
June was the third month of the year to record an increase in volumes compared with the prior year, and it was also the highest increase recorded so far in 2015.

Source : http://www.aircargonews.net/news/airports/single-view/news/european-airports-record-growth-in-h1-2015-but-only-just.html 

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Hong Kong airfreight chief steps down

Hong Kong Association of Freight Forwarding and Logistics (HAFFA) chairman Paul Tsui is to step down and will be replaced by Cliff Sullivan, senior vice-president of A-Sonic Logistics. Mr Tsui is a 30-year veteran of the airfreight industry and in 2001 founded Janel Group, which now employs 250 staff in offices throughout China. Mr Sullivan has been a HAFFA executive committee member since 2001.

Source : http://www.aircargonews.net/news/people/single-view/news/hong-kong-airfreight-chief-steps-down.html

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Sharp decline in load factors

Airfreight demand growth began to ease off in April, resulting in a “sharp” decline in load factors as they reached their lowest level for a year.
The latest IATA figures show that airfreight volumes increase by 3.3% year-on-year in April compared with growth of 4.3% for the first four months.
It said that the slowdown was mainly the result of a weakening in demand in Asia Pacific, where freight tonne km (FTK) increased by 4.5% in April against the year-to-date figure of 7.3%.
“The slowdown is consistent with a reversal in earlier gains in regional trade,” IATA said, adding: “Part of the recent decline in emerging Asia exports is reflecting economic weakness in Europe, which dampens demand for manufactured goods shipped by Asia Pacific carriers.”
One contact at a European logistics firm confirmed this assumption earlier today, saying the weaker Euro was having an effect on consumers' buying power.
Conversely, exports from Europe were increasing as goods manufactured on the continent became cheaper elsewhere.
“Results have been mixed,” IATA added. “Carriers in the Middle East continue to show strong growth, with a rise of 14.1% in April year-on-year, reflecting continued expansion in capacity and network, as well as robust trade with Middle Eastern economies.
“In Europe, by contrast, airfreight volumes carried by regional airlines fell 0.3% in April year-on-year.
“Recent improvements in business confidence in the Eurozone are yet to translate to increased demand for airfreight and consumer confidence remains subdued.” 
As a result of the growth slowdown and capacity increases, the association said load factors “dipped sharply in April” to 44.7%.
In March, the figure stood at 47.9% while in April last year, load factors stood at 45.4%.
“Levels are now the lowest they have been for the past year, on a seasonally adjusted basis. All regions except Africa recorded an increase in capacity in April compared to March.”
The region with the weakest load factor in April was Africa, at 30.9%, while Asia Pacific was the best preforming with 53.2%.
IATA was not confident of a major improvement in the year ahead, although it still expects there to be growth in 2015.
“Acceleration in the airfreight growth trend is unlikely in the near term. Globally, April data show no increase in business confidence compared to the start of the year.
“Furthermore, export orders have shown gradual decline throughout the first quarter, and are now indicating no growth.
“That said, for 2015 overall, moderate expansion in air freight is expected alongside anticipated improvements in the global economy.”

Source: IATA

























Source : http://www.aircargonews.net/news/airlines/single-view/news/sharp-decline-in-load-factors.html

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FedEx sees peak season bounce

US parcels giant FedEx saw third quarter revenues up four per cent to $11.7bn.
“We had a very successful peak season as volumes grew across all transportation segments, and our profit improvement programs are moving ahead as scheduled,” said Fred Smith, FedEx Corp chairman, president and chief executive officer.
Operating results for the third quarter ended February 28 improved due to volume and base yield growth in all three transportation segments of ground, freight and express.
There was also a “significant net benefit” from fuel, benefits from profit improvement program initiatives, a lower year-over-year weather impact and reduced pension expense.
These improvements were partially offset by higher variable incentive compensation accruals.

Source : http://www.aircargonews.net/news/single-view/news/fedex-sees-peak-season-bounce.html

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TNT launches Tel Aviv freighter links

TNT has launched a Monday to Friday B737-400F service between Israeli capital Tel Aviv and the express operator's European hub in Liege, Belgium.
The new service "answers increasing demand" and allows TNT to shorten transit times for express shipments to and from Tel Aviv by one day.
The flight arrives in Tel Aviv in the morning for same day deliveries, and departs in the evening, allowing for close of business pick up and same day export
Martin Sodergard, managing director network operations at TNT, said: "With this flight operated by TNT, our customers will benefit from improved delivery reliability, as well as later cut-off times for pick-ups thanks to improved departure times.
"It also gives us additional capacity to further grow our business in and out of Israel.”
The European Union is the first trading partner for Israel, with total trade amounting to approximately €29bn in 2013. 
Typical TNT shipments to and from Israel include machinery, electronic products, medical equipment and textiles
Under the company’s outlook strategy, TNT is working to combine its European road network with a stronger international air network.
TNT has recently upgraded its road express services to Turkey and the Balkan countries, and added Hannover and Venice to the European air network. 

Source : http://www.aircargonews.net/news/single-view/news/tnt-launches-tel-aviv-freighter-links.html

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We will do better, promise TNT management

TNT Express has outlined the steps that will return the parcels and freight operator to profit.
A core part of its strategy is to set up focused international Europe and domestic units, strengthening its management and accelerated investment in its transport and IT, along with improved service levels.
At a capital markets day conference this week in London, chief executive Tex Gunning and his senior management team sketched out the details.
TNT Express had earlier announced a €137m loss in the 2014 fourth quarter and a warning from Gunning that the company continues to face challenging trading conditions.
TNT was the subject of a failed takeover bid by UPS in 2013, and restructuring charges (€70m), goodwill impairments (€32m) and the costs of a re-launch (€22m) since then have compounded its financial woes.
Chief financial officer Maarten de Vries admitted that the company had suffered from a “structural underinvestment in infrastructure and IT” since the express arm of the company was demerged from the postal operations in 2011.
But since then, the company had invested to “drive operational excellence”. Further investments would, in 2018-19, further improve service reliability and lower the cost base, he said.
The company’s cost reduction programme - branded ‘Deliver!’ – had reduced worldwide headcount from 62,468 in 2012 to 58,292 he added. The target now was to generate €250m of cost reductions and realised €125m of net savings by 2018.
One of the ways this will be achieved will be by simplifying the current highly complex service portfolio – over 3,500 product codes – to a much more streamlined offering of four basic products with 75 options.
Maarten de Vries also said that processes and IT systems were much too complex and a centralised global IT organisation would be put in place.
A new ‘simplify and transform’ programme over the next three to five years would cut IT spending by €100m, although in the short term there would be IT cost increases and there would be a €70m investment in new IT systems.
Activities such as accounting, procurement, data management and customer contact centres, currently operated mainly on a country by country basis, could be consolidated through shared service centres, saving €100-150m by 2018.
The price to pay for these root-and-branch reforms would be restructuring charges of €250-300m over three years. However, these should diminish to no more than €25-50m by 2017, after hitting a peak of €125-175m in 2016.
Investment of €800-€900m in 2015-17 would, among other things, increase European air network capacity by 50 per cent, as well as improving productivity and reliability. Investment in hubs would include two new ones in the UK, three in Australia and modernisation and automation in France and Italy, added domestics managing director Marco van Kalleveen.
International Europe managing director Ian Clough pointed out that TNT was still a major player in the European global market, with 12 per cent of the total, third only to DHL (19 per cent), UPS (16 per cent) and well ahead of FedEx and Schenker’s five per cent each.
But he said that it was important to ditch the current “dysfunctional organisation” with its “heavy overhead structure” and create an integrated international European business.

Source : http://www.aircargonews.net/news/single-view/news/we-will-do-better-promise-tnt-management.html

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European Airlines Freight Traffic

This is the monthly year-over-year percent change in overall freight traffic and Asia-Pacific freight traffic for European airlines. Asia Pacific fell in June 2014, and overall increased. Source: Association of European Airlines

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