Good news keeps pouring in, making it more likely that 2014 will generate the highest air cargo revenue since 2011.
August showed a robust year-over-year (YoY) volume growth of 6.6%. Revenues (in USD) increased even by 7.4%. Specific product categories again performed better than general cargo (volume +7.8% and yield +1.4%), whilst the volume of express cargo grew by almost 10%.
Yields improved YoY for the fourth month in a row, driven by Europe, North America and the Middle East & South Asia (MESA).
Volume growth came particularly from the three other regions, viz. Asia Pacific (+13%), Africa and Central America. The worldwide yield increase was less than in previous months however: a warning signal for the months to come?
Of the 30 largest city pairs, Shanghai-Chicago grew in volume by 66%. Hong Kong - Los Angeles and Hong Kong – London followed with growth of resp. 32% and 22%: all three also showed a yield increase. The worst performing of these top O&D's was Hong Kong – Tokyo: volume -11% and yield -3%. Of this top-30, 20 had an origin in Asia Pacific and 6 in Europe (5x Frankfurt and 1x London). As for incoming business, MESA was strongest (revenue + 16%), followed by North America (+12%).
For the year so far, we noticed one constant factor: foreign airlines take the largest part of the growth in each major region.
The origin with the highest YoY revenue growth is Asia Pacific, but the growth goes mainly to carriers from MESA. The second growth region is Europe, where MESA-airlines grow fastest, followed by the North American carriers, whilst Europeans profit the least. And in North America the situation is similar: MESA-airlines lead the growth, but the North Americans lag behind on their home turf.
Which dynamics could be at work here? Monitoring changes in sales networks may provide part of the answer: what is a carrier's retention rate among agents, which 'new' agents does it work with, which agents are 'lost', are the changes in each category related to volume, to yield or to both? We just began researching this subject, and made a high-level comparison between July 2013 and July 2014.
Air cargo revenue in July 2014 increased by 9% YoY. Revenue made by airlines through 'retained' agents increased by 8% (purely thanks to additional volume), with airlines from Asia Pacific achieving the highest growth (+12%). In other words, they performed best in generating additional revenue through agents with whom they had also worked a year earlier. In Africa and MESA, airlines saw a decline in revenue generated through their retained agents.
Through our agent name standardization program, we were capable to segment the retained agents by size: it is the smaller size agents that appear to account for two-thirds of the absolute growth between July 2013 and July 2014. Lost and new agents each represented about 25% of the total number of agents the average carrier did business with.
This significant number shows that carriers may not enjoy long term relationships with a sizeable part of their agent network. Monitoring changes in distribution may be helpful in building such relationships.
- WorldACD provides air cargo market data based on airline sources covering all countries.