One bright spot in the US gloom is the impact a lower US dollar is having on US terms of trade. US exports are rising, providing a rare fillip for the traditionally weak outbound legs of freight services, particularly to Asia.
A US recession has been more or less confirmed by falling job numbers and contracting retail sales data this week. UPS also confirms domestic US freight volumes began to contract year-on-year from late Jan-08.
But UPS added that other areas of the business continue to perform well, with international freight volumes, including US exports, showing “strong growth” as the US dollar falls.
Meanwhile, Cathay Pacific reports that while the cargo market saw a “slow recovery”after Chinese New Year (which has maintained pressure on yields), overall revenue was boosted by “strong growth”in exports from the US. The carrier has aggressively increased freight capacity over the past two years. It added freighter services to India in the month, which helped to grow revenues, following the signing of the expanded Hong Kong SAR-India air services agreement.
The passenger sector also reported a “healthy start to the year”, according to Cathay, reviewing combined Jan/Feb-08 traffic. But competition is intensifying and Cathay is rapidly ramping up capacity this year (+12.8% in Jan/Feb-08) as new aircraft join the fleet. Cathay's share price fell 4.5% yesterday and, at HKD15, is currently well off its 52-week high of HKD24.
In addition to AirAsia joining the Hong Kong market from May-08, the liberal Hong Kong SAR-Japan air services agreement reached last month will lead to increased market competition, including several new services by Hong Kong Express.