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CNS 2016: Surge in cargo demand on the horizon?

Time:2016-04-14 20:51 Source:Air Cargo World Writer:admin Click:Times

NASHVILLE – How can a presentation that began by classifying the market for airfreight as “mediocre” and was presented by a speaker who openly admitted to a rather bearish outlook for the remainder of 2016, contain even a thread of optimism? IATA’s senior economist, George Anjaparidze, managed to do just that during his presentation yesterday at the CNS Partnership Conference. Although most economic indicators traditionally linked to the performance of the airfreight market are, at present, not stellar, there are a few hopeful developments that could potentially lead to a turnaround during the second half of the year.

 

Starting with the good news, many leading indicators of airfreight demand, including U.S. employment levels, have returned to pre-crisis levels and consumer confidence is on the rise. On the supply side, low oil prices persist — though the expected surge in consumer demand, has yet to be seen. Anjaparidze did note that US savings are up 5 percent as consumers moved to consolidate and pay down debts. Moving forward, the economy could still experience a delayed impact from low oil prices driving import demand. Returning to the bearish roots of his outlook, Anjaparidze admitted that economists do not really know if or when this stimulus will occur and that the long-term impact remains an “enigma.”

 

On the flipside, depressed oil prices have contributed to depressed yields and a surge in capacity as carriers find it profitable to bring previously parked freighters out of storage and back into service. Bloated capacity also persists from the rapid growth in passenger traffic, the demand for which continues to benefit from low energy costs. Between 2008 and 2013, passenger traffic grew 45 percent on a revenue-per-kilometer basis, nearly three times as fast as cargo traffic, which rose 13 percent during the same period, on a freight-tonne-kilometer basis.

 

Also of concern is slowing World GDP growth, particularly in developing economies — a figure often linked to a multiplier for estimating the airfreight market expansion. Developed economies with robust consumption, including the Eurozone and U.S. markets, are expected to gradually return to normal growth levels, while Anjaparidze expects the IMF to revise-down growth rates for developing economies.

 

The presentation then shifted from future demand to a debate over the significance of belly cargo and the role of maindeck freighters in the future. Although IATA has yet to release an estimate, Anjaparidze shared three contrasting figures from McKinsey, Airbus and Boeing. McKinsey expects the ratio of belly cargo to surge ahead of maindeck freighters with a 65 market share, while Boeing expects maindeck freighters to continue to play a major role, with belly capacity commanding only a 45 percent market share at a future point of equilibrium. Airbus was somewhere in the middle with expectations that belly capacity will carry slightly more than half the world’s air cargo, with a 55 percent market share.

 

Audience members baffled at the variance between the estimates produced by the three reputable companies sparked a heated discussion — which only highlighted further the complications of such critical estimates.

(Editer:admin)

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