Strong air freight recovery in North America

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After a period of economic uncertainty regarding the US trade policy and risks related to Brexit, global commerce is no longer sidelined. The rise in business confidence is translated into a robust recovery in air freight volumes in 2017 and North America is recording the highest growth rates.

Reji John

When leaders of the United States, Canada and Mexico, members of NAFTA or North American Free Trade Agreement, meet this month in Washington, movement of goods and supply chains are going to be discussed seriously by the leaders of the trilateral trade block of North America. It is reported that the three countries will call for a potential overhaul of the NAFTA particularly after the US administration led by President Donald Trump outlined key goals that include improving access for US goods exported to Canada and Mexico. It is also learnt that the Trump administration also wants much stronger labor standards in a new NAFTA, an outcome that could raise labor costs in Mexico and change the economic measures manufacturers have used in shifting factory work from the US to Mexico.

However, amidst all these geo-political concerns and after a period of economic uncertainty regarding the US trade policy and risks related to the United Kingdom’s vote to withdraw from the European Union, global commerce is no longer sidelined. According to data published by Airports Council International (ACI), the rise in business confidence translated into a robust recovery in air freight volumes in 2017, increasing by 11.1 percent year over year in May. According to ACI, airports across all regions demonstrated high growth during that period, but Europe and North America presented the highest increases, with growth rates of 12 percent and 11.9 percent respectively.

ACI said that freight traffic numbers in North America were boosted by their largest freight hubs. Four of their top five airports in terms of cargo volume, representing 43.2 percent of total cargo in 2016, posted double digit growth. Anchorage (ANC), Louisville (SDF), Miami (MIA) and Los Angeles (LAX) all experienced increases between 11 percent and 13 percent. Memphis (MEM), the largest freight hub of the region, grew 1.3 percent. Domestic freight played an important role in that increase, surging 9.1 percent in May after a period of stunted growth, illustrated by the 1.7 percent year to date results.

According to the latest available data from The International Air Transport Association (IATA), North American carriers posted an increase in freight volumes of 13.9 percent in May 2017, and a capacity increase of 4.1 percent. Seasonally-adjusted volumes rose again in May, after a jump in April, indicating signs of a lasting pick up. The strength of the US dollar continues to boost the inbound freight market but is keeping the export market under pressure.

IATA forecast air cargo demand for North American carriers, which hold a 21 percent share of global air cargo traffic, show a 13.9 percent increase in demand, with 4.1 percent capacity growth, producing a 36.4 percent freight load factor. North America’s international air freight demand increased 19.3 percent year-on-year in May; its fastest pace since August 2010.

The growth is also visible at other airports. Halifax Stanfield International Airport, which is Atlantic Canada’s principal full-service airport providing passengers and cargo clients with access to markets across the globe, handled 34,000 tonnes of cargo in 2016 up 4.1 percent over 2015.

“Our latest numbers show an impressive improvement in quarter one of 2017, volume is up 21.4 percent year over year. This increase was bolstered by new direct flights to China,” said Bert van der Stege, Vice President & Chief Commercial Officer at Halifax International Airport Authority, the operator of the airport.

Talking about the factors that make Halifax Stanfield Airport the best choice for cargo movements Stege said that live lobster demand from EU remains very strong and steady and its demand from Asia is growing at a phenomenal rate – 450 percent over the last five years.

“There seems to be ample supply and yields are high enough to attract the interest of a number of airlines. In Asia, our primary markets are China and South Korea. However, through the various connections offered by our cargo operators, there is seafood export from our region to other countries in Asia, including to India. Qatar Airways Cargo, for example, connects India very well once the Halifax B777 freighter arrives in Doha. So does Korean Air Cargo via Incheon,” adds Stege.

Another important airport that is significant for North America’s air freight industry is Miami International Airport. Emir Pineda, Manager, Aviation Trade & Logistics Marketing Division, Miami-Dade Aviation Department, operator of Miami International Airport, says that the airport’s international traffic grew 5.3 percent with over 820,620 tonnes flown. And for Miami, the strength continues to be in perishables and pharma.

“The first five months (Jan-May 2017) have been very good, with overall traffic growing 5.7 percent year-to-date. The total value of pharma imports transported through MIA increased by 394 percent CYTD Jan-Apr by value and by 53 percent CYTD Jan-Apr by weight,” said Pineda.

MIA’s freighter network covers most of the world with 79 weekly freighter flights to Latin America by multiple air carriers, service to Europe is provided by Cargolux, AirFranceKLM Martinair Cargo, Latam, Centurion, Atlas and starting next year Amerijet to Brussels. To Asia MIA is served by Korean Air, Asiana to Seoul, Cathay Pacific to Hong Kong and China Airlines to Taipei. MIA does not have any service to Africa but Pineda says that MIA is “aggressively working on it”.

Cargo volumes at John Glenn Columbus International Airport (CMH) and Rickenbacker International Airport (LCK) increased significantly year-to-date over 2016, supported by a thriving regional economy, new air service announcements and airport developments. Cargo imports and exports at Rickenbacker rose 21 percent in the first half of 2017, driven by increased service from Etihad and Trinity Logistics, the 2016 expansion of Emirates, and the June 2016 opening of Air Cargo Terminal 5 in collaboration with public and private partners.

“Passenger and air freight carriers are capitalising on the dynamic opportunities that continue to arise in the Columbus Region, enabling our airports to offer additional travel options for passengers and strategic opportunities for businesses,” said Elaine Roberts, president & CEO of the Columbus Regional Airport Authority, which also oversees Bolton Field airport.

According to the latest available data, the air freight industry within the NAFTA countries had a total market value of $16 billion in 2016.The Canada was the fastest growing country, with a CAGR of 1.7 percent over the 2012-16 period. Within the air freight industry, the US is the leading country among the NAFTA bloc, with market revenues of $14.4 billion in 2016. This was followed by Canada and Mexico, with a value of $1.2 billion and $473.7 million, respectively.

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