May 2018: Is the party really over? For everyone?
Lots of people have taken up the pen lately, writing about the end of the boom, the end of the party. Are they all doomsday prophets, nay-sayers and other assorted pessimists? Maybe, but sometimes people turn out to be plain right in their predictions, making them realists.... Put differently: do we experience just a small dip in growth, or do we witness an 'inevitable' slide into a more modest performance of a world economy which looked so robust only a few months ago?
The development in air cargo in the month of May 2018 confirms a downward growth trend noticed since the start of this year. But growth it is nonetheless, although less than in 2017. Year-over-year, air cargo volume increased by 2.6% worldwide, yield measured in EUR by 7.1% and measured in USD by 14.4%. For January through May, the growth was 4.3%.
The origins Chile (+58%), Japan (+18%), Canada (+17%), and the USA (+5.8%) easily outperformed many other countries. But the growth from the Americas came at a price: YoY USD-yield improvements in the Americas were well below 10%, much lower than elsewhere in the world. The origins India, Russia and Western Europe all showed negative YoY growth in May. As in previous months, long haul traffic increased more than short haul (3.0% growth in Direct Ton Kilometers, DTKs, vs. 2.6% in weight), whilst specific cargo categories again outpaced general cargo (5.5% vs 1.5% growth).
Yet, the fear of growing protectionism is real, and that fear may well play a role in a shift away from consumption. Will the whole world suffer? To what extent will some regions feel the heat of the trade war (mongering) more than others? Impossible to tell, so let us stick to what we know and see how a number of large economies performed lately.
For a number of countries, we looked at GDP-developments, as reported by The Economist in its latest issue, relative to air cargo growth. Until 2009, the conventional wisdom was that air cargo roughly grew at twice the rate of GDP-growth. Since the crisis this ratio first dropped from 2:1 to 1:1 and then climbed again gradually. Where does it stand today?
This table clearly shows that it is no longer possible to use a general ratio between GDP-growth and air cargo growth....
Neither is it possible to assume that growth in any geographical area will 'automatically' benefit the carriers based in that area. Actually, the contrary appeared to be the case when reviewing growth over the past two years!
The African carrier group was the only one improving its (small) market share in all regions. So did carriers from Asia Pacific, except in their home area. Carriers from the Americas increased their market share in three regions, but lost share in both North and South America. The group of Middle Eastern carriers lost share in three regions, including their home area, and gained in Europe and Latin America. Lastly, the group of European carriers gained share everywhere, except in their home market Europe...
In other words, the growth in traffic from all areas except Africa, benefited the group of 'non-home carriers' more than the group of 'home carriers'.