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Cargo traffic remains soft but shows signs of stabilization

Cargo profitability came under increased downward pressure early this year, as fuel prices rose sharply, while yields declined on the back of falling asset utilization. That decline appeared to stabilize along with freight volumes at the end of last year, with the downturn in January being almost entirely due to the earlier Chinese New Year holiday.

However, significant increases over the year in aircraft deliveries will make load factor management a challenge.

Freight Traffic Growth

The demand environment for air freight continues to be weak - increases in world trade favor sea cargo; consumer confidence remains weak in Europe and has softened in China; and shipments of important air-freighted commodities such as semi-conductors have declined. But there are some positive signs.  Firstly, improvements in business confidence over recent months are consistent with the stabilization in air cargo markets since the end of 2011.

Marked improvement in US consumer confidence is a positive sign for demand of consumer goods typically moved by air. And with no sign of an inventory overhang there is little threat that businesses will need to reduce air cargo shipments.

 Consumer confidence

 

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