Emergency aircrafts bolster Victorian PPE supply

A global transport company has collected millions of dollars worth of gloves, masks, swabs, face shields and gowns from manufacturers in China and Malaysia, and critically moved the PPE into emergency storage for Victorian hospitals.

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as air freight capacity becomes more available at lower costs, more companies are taking advantage of the situation.

Report finds $109bn of trade ‘flying under the radar’

A new report by Infrastructure Partnerships Australia and BIS Oxford Economics’ shows the goods travelling in the belly of international aircraft arriving and departing Australia are worth a massive $109 billion annually.
The 2019 International Airfreight Indicator, the latest report in Infrastructure Partnerships Australia’s data and measurement series, reveals that one in every five dollars of Australia’s traded goods travels via air.
“Every day, more than 550 international flights arrive and depart Australia, yet until now, we have been remarkably blind to the value, the type of commodity, and the economic contribution of goods that travel in the belly of these aircraft,” said Infrastructure Partnerships Australia chief executive Adrian Dwyer.
“The 2019 International Airfreight Indicator shines a light on a multi-billion industry that has historically gone unnoticed in our broader trade debate.
“The indicator shows that airports are crucial to our trade story, and the cargo transported beneath passengers is vitally important to airlines, airports and the Australian economy.
“Last year alone, $109 billion of international trade passed through Australia’s airports, with airfreight set to top $114 billion this financial year.
“Whilst airfreight only represents 1 per cent of Australia’s trade volume, it punches well above its weight in value.
“One in every $5 of Australia’s imports and exports travels via our airports – making the airfreight sector one of the largest value contributors to Australia’s trade position.
“In a period of heightened trade tensions and structural economic change, it’s critical that we use data like that presented in the 2019 International Airfreight Indicator to improve the way we plan, regulate and invest in our freight sector.
“Without useful data to examine and measure our freight sector we will be flying blind on our international trade.
“That is why we have called on Government to establish a dedicated freight body to independently measure and publish detailed analysis of the overall performance of our logistic and supply chain networks,” Mr Dwyer said.
Some of the findings:

  • In FY2017-18, $109 billion of international trade passed through Australia’s airports, with more than 96 per cent of international airfreight passing through the four main capital city airports – Sydney, Melbourne, Brisbane and Perth.
  • Whilst airfreight only represents 1 per cent of Australia’s trade volume, it represents 21 per cent of goods in trade value.
  • The amount of goods flowing in and out by air is now 70kg for every person – a 60 per cent rise in the last five years. This reached a record high over FY2017-18.
  • More than 80 percent of our airfreight is carried in passenger aircraft, with the balance carried in dedicated freight aircraft.

Air cargo volumes indicate worldwide trade slowdown

WorldACD reports that the enduring downward slide of air cargo volumes continued last month.
The first month of 2019 confirmed the trend we have seen for a number of months now: another volume drop, this time of 2% YoY, coupled with a yield drop (in USD) of 2.5%.
The smaller regions of Africa and Central & South America (C&S Am) again managed a YoY increase in outgoing business (by 3.8% resp. 0.6%), in the case of C&S Am accompanied by a YoY yield increase (in USD) of almost 5%.
All other origin regions were down YoY. For the origins Europe and North America, the drop hovered around 4%, but even more telling was the drop in incoming business in Asia Pacific (-6% in total, -8% from the origin North America, and -9.5% from the origin Europe).
Origin China grew by 5% YoY, but the destination China fell by more than 10%. We observed this trend also in the past two months, but it was more pronounced in January due to the early Chinese New Year (Feb 5 in 2019).
As we see it, the period preceding this day seems to have a small positive effect on outgoing business from Asia Pacific, but a more serious negative effect on incoming business.
The countries doing well in January were Morocco and Egypt in Africa, and Ecuador and Costa Rica in C&S Am. And what to say about the United Kingdom? Whilst all individual countries in Western Europe saw a YoY drop (- 5.5% in total), the UK grew by 5%…. Do we witness a pre-Brexit stocking up of goods made in Britain? Germany fared worst in Europe, with a YoY drop in outgoing air cargo of 8.7% (-14.5% to Asia Pacific).
On the product front, January 2019 was a good month for certain specific cargo categories. Apart from general cargo, valuables and dangerous goods, all categories improved YoY. The big categories of perishables and high tech grew by 6% resp. 4%, pharmaceuticals by 5% and the much smaller group of live animals by 9%.
Trying to find out which (groups of) companies may have best positioned themselves for a good performance in 2019, we looked who did relatively well in the ‘downturn’ of 2018, compared with the bumper year 2017.
In spite of an overall growth between the two years of 2%, most airline groups hardly grew: airlines from Asia Pacific reported 0.7% growth, whilst those from Africa, MESA and C&S Am languished around the no-growth point. Only the airlines from North America (+6.3%) and Europe (+3.8%) beat the worldwide average growth. Remarkably, the Europeans improved their share everywhere, except in Europe itself.
The world’s top-20 forwarders went from a 43.2% to a 43% market share. But within this elite group, differences were noticeable. The 13 forwarders with a European origin grew by 0.5% only, whilst the 4 MESA and North American forwarders did just a bit better (+1.5%). The real winners in 2018 were the Japanese forwarders, growing their business by 7.2%, mainly driven by growth in Asia Pacific and North America. Leading forwarders in perishables, such as Kuehne + Nagel, Panalpina, DB Schenker and Newport, recorded double digit growth (between 13% and 16%) in this category.
Lastly, GSA’s grew their business by 5.2%. The two groups dominating the GSA-field (ECS and WFC), representing around 30% of the total volume sold by GSAs, together grew by 3.7% i.e. less than the GSA-market as a whole. Their individual performances differed quite a bit.
January 2019 at a glance:

  • Total Chargeable Weight: -2.0% year-over-year (YoY); -6.2% month-over-month (MoM).
  • General cargo -5% YoY, special cargo +4.6% YoY.
  • Direct Ton Kilometers (DTK’s): -1.9% YoY. (Given the -2% change in volume, this means that average distance per shipment hardly changed).
  • Yield dropped to USD 1.84 (-2.5% YoY, -8.0% MoM).
  • The cargo load factor dropped by 1.9%-points YoY and by 4%-points MoM.
  • Revenues (USD) from the smallest shipments (0-50 kg) suffered least (-2.1% YoY), those from the largest shipments (>5000 kg) suffered most (-6.4% YoY).

(See www.worldacd.com/yields for more yield developments.)

as air freight capacity becomes more available at lower costs, more companies are taking advantage of the situation.

Air freight update: up 3.5%, despite softening late 2018

The International Air Transport Association (IATA) has released full-year 2018 data for global air freight markets showing that demand, measured in freight tonne kilometres (FTK) grew by 3.5% compared to 2017. This was significantly lower than the extraordinary 9.7% growth recorded in 2017.
Freight capacity, measured in available freight tonne kilometres (AFTK), rose by 5.4% in 2018, outpacing annual growth in demand. This exerted downward pressure on the load factor but yields proved resilient.
Air cargo’s performance in 2018 was sealed by a softening in demand in December. Year-on-year, December demand decreased by 0.5%. This was the worst performance since March 2016. Freight capacity, however, grew by 3.8%. This was the tenth month in a row that year-on-year capacity growth outstripped demand growth.
International e-commerce grew in 2018, which was a positive factor for the year. Yet, there was a softening of several key demand drivers:

  • The restocking cycle, during which businesses rapidly built up inventories to meet demand, ended in early 2018.
  • Global economic activity weakened.
  • The export order books of all major exporting nations, with the exception of the US, contracted in the second half of 2018.
  • Consumer confidence weakened compared to very high levels at the beginning of 2018.

“Air cargo demand lost momentum towards the end of 2018 in the face of weakening global trade, sagging consumer confidence and geopolitical headwinds,” said IATA’s director general and CEO Alexandre de Juniac. “Still, demand grew by 3.5% compared to 2017. We are cautiously optimistic that demand will grow in the region of 3.7% in 2019. But with the persistence of trade tensions and protectionist actions by some governments there is significant downside risk. Keeping borders open to people and to trade is critical.
“To attract demand in new market segments, the air cargo industry must improve its value proposition. Enabling modern processes with digitalization will help build a stronger foothold in e-commerce and the transport of time- and temperature-sensitive goods such as pharmaceuticals and perishables,” Mr de Juniac said.

Regional performance
Airlines in all regions with the exception of Africa reported an annual increase in demand in 2018.
Asia-Pacific carriers posted the weakest growth of any region in December 2018 with a decrease in demand of 4.5% compared to the same period a year earlier. Capacity increased by 2.6%. The weaker performance in December contributed to growth in freight demand of only 1.7% in 2018 compared to 2017. Annual capacity increased 5.0%. The weaker performance of Asia-Pacific carriers in 2018 largely reflects a slowing in demand for exports from the region’s major exporters (China, Japan and Korea). Signs of a moderation in economic activity in China and an escalation of trade tensions continue to pose a downside risk to air cargo in Asia-Pacific.
North American airlines posted the fastest growth of any region for the seventh consecutive month in December 2018 with an increase in demand of 2.9% compared to the same period a year earlier. Capacity increased by 4.5%. This contributed to an annual growth in demand in 2018 of 6.8%, matching the rate of capacity increase. The strength of the US economy and consumer spending have helped support the demand for air cargo over the past year, benefiting US carriers.
European airlines posted a 1.9% year-on-year increase in freight demand in December 2018 and a capacity rise of 3.7%. The improved performance in December contributed to an annual growth in demand for air cargo of 3.2% in 2018. Capacity increased by 4.3% in the same year. Weaker manufacturing conditions for exporters, particularly in Germany, one of Europe’s key export markets, along with mixed economic indicators impacted demand in 2018.
Middle Eastern carriers’ freight volumes increased 0.1% year-on-year in December and capacity increased 4.5%. This contributed to an annual increase in demand of 3.9% in 2018 – the third fastest growth rate of all the regions. Annual capacity increased 6.2%. The region continues to be affected by geopolitical issues.
Latin American airlines experienced a decrease in year-on-year demand of 0.1% in December after three months of positive growth. Capacity increased by 6.0%. Despite a decrease in demand, it’s worth noting that the within South America market continues to perform strongly, with international demand up almost 20% year-on-year. Annual growth in freight demand among Latin America carriers in 2018 increased by 5.8% – the second fastest of all regions. Annual capacity increased 3.4% in 2018.
African carriers’ saw freight demand decrease by 2.2%, in December 2018, compared to the same month in 2017. This was significantly less than the 9.4% decrease the previous month. Capacity increased by 4.9% year-on-year. It’s worth noting that seasonally-adjusted international freight volumes, despite being 7.7% lower than their peak in mid-2017, are still 50% higher than their most recent trough in late-2015. Annual growth in freight demand among Africa carriers in 2018 decreased by 1.3% and capacity grew by 1%.
 

ACCC approves Qantas arrangements

The ACCC will re-authorise the Qantas Emirates alliance as well as allowing Jetstar’s Asian brands to coordinate.
Qantas and Emirates
The ACCC is proposing to grant re-authorisation to an alliance between Qantas Airways Limited and Emirates for a further five years.
The global alliance covers Qantas’ and Emirates’ air passenger and cargo transport operations. The ACCC first authorised the alliance in 2013 for five years.
“The ACCC considers that the alliance is likely to continue to result in a range of public benefits,” ACCC Commissioner Roger Featherston said.
“Combining the networks of Qantas and Emirates provides customers with access to more flights and destinations under a single airline code and improves connectivity.”
“Loyalty program members will also continue to benefit from the ability to earn and redeem points on both networks and use lounge access and other reciprocal benefits,” Mr Featherston said.
“However, the ACCC is concerned that the alliance is likely to significantly impact competition on one route, Sydney to Christchurch; Qantas and Emirates are the two major operators on this route and their only competition is from the Virgin Australia and Air New Zealand alliance.”
To address this concern, the ACCC proposes to impose a condition requiring the Qantas and Emirates alliance to provide the ACCC with regular reports on seats and passengers flown, fares and route profitability. The condition would also allow the ACCC, at any time, to set a minimum level of capacity on the route. For example, if these reports indicated that the alliance was limiting the number of seats on this route to raise airfares, the ACCC would require the alliance to add extra seats.
In 2013 the ACCC imposed reporting and capacity conditions on four routes between Australia and New Zealand. However, since starting direct services between Auckland and Dubai in March 2016, Emirates has withdrawn from the Sydney to Auckland route, and will withdraw from the Melbourne and Brisbane to Auckland routes in March 2018. The ACCC considers that the capacity conditions are no longer required on these routes.
The ACCC is seeking submissions from interested parties on its draft determination before making a final decision on whether to re-authorise the conduct and impose conditions. Submissions are due by 7 March 2018.
Jetstar
The ACCC has also decided to re-authorise the continued coordination of three Qantas Asian-based joint ventures: Jetstar Asia, Jetstar Pacific and Jetstar Japan.
The Jetstar joint venture airlines are also seeking to coordinate with their shareholding airlines Qantas, Japan Airlines and Vietnam Airlines, on passenger and cargo services within Asia.
The decision continues an ACCC authorisation made in 2013.
By coordinating, the Jetstar-branded airlines are able to operate as a single fully integrated organisation on matters such as flight scheduling, sales and marketing, and pricing.
“The ACCC considers that continuing this coordination should lead to public benefits, such as better products and services, and more convenient flight times for consumers,” Mr Featherston said.
“This conduct is likely to result in little, if any, lessening of competition. Our view is the joint venture airlines would be unlikely to compete directly with each other or their owners in the absence of the proposed coordination.”
The re-authorisation does not extend to allowing coordination between the owners of any of the joint venture airlines.

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