Global air freight is at peak demand and so are prices.
New figures from WorldACD show prices have been rising at their highest rate since the economic recovery that began in 2009 following the Great Recession, with average yields up 17 percent in dollar terms in November and by as much as 40 percent on trades such as Europe to North America.
“With November figures in, it is clear once again that 2017 breaks one air cargo record after another,” WorldACD said in its monthly analysis. “The record volume worldwide, as seen in October, has already been relegated to the history books one month later–November beat October by 1.3%.”
According to the International Air Transport Association (IATA), air cargo demand grew 9.2% in the first 10 months of 2017 year over year, compared to an annual average growth rate of 3.2% in the last 10 years. IATA had forecast 7.5% growth in air freight demand in 2017.
Growth in e-commerce and pressure in speed to market throughout the supply chain has helped propel prices. DHL, UPS and FedEx have all cited e-commerce growth in recent earnings reports as a key growth sector, and have added cargo and logistics capabilities to better meet demand.
Travis Cobb, senior vice president of network operations for DHL Express, in discussing the demand for fast deliveries over the holiday season and as major B2B and B2C trend overall, said, “We’re…expanding intercontinental aircraft capacity and facilities in major trade lanes.”
[Read more about DHL: DHL Expands Capacity and Logistics to Meet E-Commerce Fulfillment Demands]
Drewry’s East-West Air Freight Price Index gained 20 cents in October to reach a year-high $2.89 per kilogram. Rates stood about 2.5% higher, year-over-year, for October, and saw their highest month-over-month gain reported in the past 12 months, with an increase of 7.5% over September.
WorldACD said that for the third month in a row, year-over-year yields increased more than 10 percent in dollar terms, rising 17.3%, although it noted that the price of jet fuel had also increased 35 percent over the same period, partially explaining the rise in total air freight costs paid by customers.
With air freight tonnages in November growing 7.8% compared to a year earlier, airline revenues in dollar terms for the month were more than 26 percent higher than in November 2016. The WorldACD volume index, showing the moving average for the then last 12 months, steadily increased over the course of 2017, from just over 120 in January 2017 to 131.6 in November, World ACD noted. The index started at 100 in 2008.
“The most striking feature of the November figures was the yield increase from Europe,” World ACD added. “Measured in euros, yields jumped by almost 19 percent, year over year, to all destinations worldwide. The Americas played an important part in this jump–year-over-year yields from Europe to North America rose 28 percent, and to Central and South America by 25 percent.”
In terms of November volumes, a number of markets showed double-digit growth from a year earlier. In the larger markets, Asia Pacific to North America increased 11.5%, Europe to Middle East and South Asia grew +11.3%, and Middle East and South Asia to Europe increased 21.1%.
In terms of air freight carriers, WorldACD said: “Looking at the various groups of airlines, we noted that airlines from Africa, North America, Asia Pacific and Europe contributed more than average to the year over year volume growth of 7.8%. They managed to grow by 14.5%, 11.4%, 9.4% and 8.7%, respectively. Airlines based in Middle East South Asia grew by 5.2% year over year, while airlines from Central and South America saw their total volume decrease by 6.4%. Of the airlines growing more than 20 percent year over year, three are based in Africa, three in Europe and two in Middle East South Asia.
Badgley Mischka, known for Old World craftsmanship, did something pretty cool and tech-forward for its latest NYFW show.Read more
Inditex SA’s stock fell to its lowest level in three years in trading on the Madrid exchange as JPMorgan cut its estimates and price target for the Zara owner.Read more
Hyosung Corp. is making an initial $100 million investment in India to increase its spandex market share by building a spandex plant in the city of Maharashtra by 2019.Read more
The Nordstrom family, which had begun the process of taking the company private last year, has taken up the effort again and could do so in a month.Read more
Reebok is gearing up for springtime outdoor sports activities by introducing the Fast Flexweave, a running shoe designed for ultracomfort and maximum speed.Read more
Maintaining compliance for apparel, footwear and home textile products could become more seamless with the latest information on restricted chemicals.Read more