Tag Archives: Air Cargo

Cargo News, Ignazio Coraci

March figures build on a great start to 2017

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Air cargo showed continuing growth in March – here, Ignazio Coraci gives his thoughts on the figures.

In a blogpost earlier this year we reflected on a positive start to the year for the global cargo sector. Analysts WorldACD confirmed this in their latest market update, showing that the industry was building on the firmer foundations of an improving world economy. This story has now continued through March this year, with air cargo business showing double-digit percentage growth – with demand in chargeable weight terms increasing by 14.6% year on year.

Impressive results

The trends are particularly encouraging from ASC Cargo and SW Italia’s perspective, as the airports and regions we operate out of have shown some of the most improved figures. The WorldACD figures confirm that Heathrow, Milan, Hong Kong and airports in the US are doing particularly well, with growth figures over 20% – WorldACD points to sea-to-air shifts and the launch of new consumer products as contributors to this success.

A note of caution

There are a couple of factors to bear in mind however, when comparing these figures to last year’s. While the growth in 2017 is impressive so far, the numbers need to be viewed in the light of last year’s relatively weak growth. WorldACD also points to the way that Easter has fallen this year as having an impact. “Especially in Europe, volumes tend to be lower around Easter − last year Easter was in March, this year in April. Also, March 2017 had one more Friday, usually one of the top cargo days, than March 2016. We expect that April will be another very good month, but − in view also of the Easter-effect − year-on-year growth may stop around 10%.”

Guarded optimism

Ignazio comments: “Add to this worries about rising jet fuel prices and the picture is perhaps a more cautious one than the positive figures might initially suggest. However, it’s clear that our industry is continuing to build on a world economy that has stabilised somewhat and is now showing signs of improvement.

“The growth the air cargo industry has shown through the start of 2017 is encouraging, and we’re proud to see that many of the areas that ASC Cargo and SW Italia operate out of are leading the way.”

Cargo News, Ignazio Coraci

Post-Brexit future still unclear

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As Britain takes its first steps towards leaving the EU by triggering Article 50, the effects of Brexit remain unclear. Ignazio Coraci comments.

The recent meeting of the British International Freight Association (BIFA), in Birmingham highlighted just how much uncertainty there still is around Brexit and its potential impact on our industry. Speaking at the meeting, Robert Keen, BIFA’s director general, reacted to Prime Minister Teresa May’s comments on the UK’s withdrawal from the European Union –  and explained that her speech left many questions still unanswered. While some basic principles have been clarified – for example that the UK will try to negotiate ‘tariff-free and frictionless trade’ between Britain and Europe – there is still a lot of uncertainty around the specifics that will directly affect our industry.

“BIFA is hoping that the government has a fundamental understanding of all of the possible permutations and challenges in regards to our future trading relationships with Europe and the rest of the world, post membership of the EU,” he said. “Freight forwarding executives are none the wiser on the actual mechanics of Britain’s future trading relationships and how they might affect the freight forwarding sector.”

A vital role

That much is clear – but as the negotiations for Britain’s exit get started in earnest, the implications of changes to transaction border controls should begin to emerge. Yet with so much detail of the mechanics of whatever will replace the current arrangements still to be decided, organisations like BIFA are fundamental to representing the concerns of our industry to government negotiators.

Joint responsibility

Commenting, Ignazio said: “It’s a developing situation, but it’s important for leaders within the industry to maintain pressure on the UK government throughout the negotiations. As a business, we agree with the Brexit Briefing ASM chairman Peter MacSwiney, who argues that maintaining a ‘frictionless’ border is still the highest priority –  the question now is what the negotiators, and we in the industry itself –  can do to ensure the UK gets just that.”

Cargo News, Ignazio Coraci

Growth of Global Middle Class to Benefit Air Cargo

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Figures indicate that globally, the middle class is larger than previously thought. Ignazio Coraci explains why the expanding international middle class could prove a valuable asset to the air cargo sector.

Driving trade

The global air freight sector depends on international trade to drive revenue, as when consumers buy goods from other countries, they generate business for the industry. Cross-border e-commerce is a particularly strong driver of air-freight growth, as it creates robust demand for air cargo services, and with this sector due to record strong long-term growth, the future looks bright for air freight firms.

The middle class, meanwhile, serves as the engine of the global economy, driving trade forward. These consumers have enough disposable income to execute big-ticket transactions on regularly, while the middle class is sizeable enough to ensure that they generate serious revenue for businesses. It is key that we have a strong middle class to spur global economic growth, and this appears to be the case.

Ignazio coraci air cargoGrowing middle class

The global middle class was estimated to measure 3.2 billion people – around half the world’s population, in 2016. But according to Global Trade Mag, an industry publication, this could be inaccurate. A paper published by Homi Kharas, a Senior Fellow at research group The Brookings Institution, suggests that the middle class could be up to 500 million larger than previously thought.

The Senior Fellow decided to re-visit his middle class calculations, due to four important developments. First, a poll of purchasing power parity prices has drastically changed, providing an improved understanding of relative economic strength. Also gross domestic product (GDP) data has improved, weakness in global economic growth has continued, and there are now new polls which provide a greater understanding of income distribution, leading to the change in middle class figures.

Moving into the future

By re-examining these factors, Homi gleaned some interesting insights. The Senior Fellow noted that Asian and African countries “were estimated to be far richer, compared to other countries, than previously imagined… Asian households in particular, are now thought to be much richer, relatively speaking, than before.” The research also showed how the global middle class will grow in future.

According to the study, the middle class is estimated to expand by 0.5% to 1% annually in advanced economies, but by 6% per year in emerging economies. Continuing, Homi wrote in the report: “Within a few years… based on current forecasts, a majority of the world’s population could have middle-class or rich lifestyles for the first time ever,” as middle class growth accelerates in the next decade.

Benefitting air cargo

Commenting on these findings, Ignazio Coraci said: “The projected growth of the global middle class during the next decade could prove beneficial to the air cargo industry. It will hopefully provide carriers with a lot of new business, especially as international e-commerce growth picks up steam, allowing them to rack up more revenue and chart a brighter future across the next ten years.”

Cargo News

Improving Global Economy Benefits Air Cargo Sector

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New figures indicate that throughout the first two months of 2017, the global air cargo sector rode the “wave of an improving world economy” to record strong growth. Ignazio Coraci comments.

Revised fortunes  

The global economy underperformed in 2016, due to shock events such as Brexit, but things picked up towards the end of the year. This was reflected by figures released by Absolute Strategy Research, which showed that “there is a reported pick-up in airfreight confidence,” which can be ascribed to increasing carrier efficiency and rising e-commerce volumes, which create new business for the sector.

Experts also recently suggested that the current economic environment has benefitted air cargo. This was recently illustrated by the semiconductor sector, which is seen as an indicator of what’s happening in air cargo. In January 2017, semiconductor industry sales climbed by 13.9%, hitting US$30.6 billion, on a year-on-year (YoY) basis, suggesting that the air cargo market has been boosted as a result.

Expanding volumes

WorldACD logoThis trend has been confirmed by analyst WorldACD’s latest market update, which showed that the recovering economy is boosting the air freight industry. WorldACD found that in weight terms, global demand for air cargo ticked up by 6.3%, YoY, from January to February 2017. The firm said that after Chinese New Year, a traditionally weak period for air cargo, demand rose straight away.

Urging caution, WorldACD was quoted by Air Cargo News, an industry portal, saying: “Are these signs a harbinger of good times to come? Air cargo seems to ride the wave of an improving world economy, making for a good outlook for this year. Yet, we should caution against expectations of the present YoY growth percentages continuing. After all, the impressive growth percentages of the past half year were possible because of the relative weakness in the equivalent period one year earlier.”

Findings breakdown

WorldACD also broke their findings down along regional lines. During the opening two months of this year, air cargo demand expanded most rapidly in the Asia Pacific (+11%), North America (+7%) and Europe (+6.5%). WorldACD also discovered that in this time, global air cargo yield dropped by 5.9%, in dollar terms, when contrasted with the same value recorded between November and December 2016.

Expanding, WorldACD continued: “Viewing January/February 2017 against January/February 2016, we see a yield drop of 2.6% in US dollar-terms, but a 0.6 % yield rise, when measured in euros… So, the good news is that January/February revenues increased YoY. However, seen against the backdrop of jet fuel prices rising strongly YoY, margins for airlines continued to be fragile.”

Amazing progress

Commenting, Ignazio Coraci said: “It is becoming increasingly clear that a stabilising global economy is benefiting the worldwide air cargo sector, as demand surged in the first two months of 2017. Demand was particularly strong in powerful consumer markets, for example the US, a nation which is set for major-long-term growth in the air freight segment, due to strong economic fundamentals and rising e-commerce activity. The global air cargo sector, therefore, holds incredible potential, as more people are now buying goods online, and the resurging economy is helping the sector to tap it.”