Airlines are resigned to an extremely severe downturn in air cargo in coming months, after truly shocking traffic figures in December and continued weakness in January.
IATA reported an unprecendented 22.6% fall in cargo in December, with no region of the world escaping. North American, European and Latin American carriers all saw falls of above 20%, and for Asian carriers - who carry 45% of international cargo - the fall was 26%. Even Middle Eastern carriers - previously somewhat immune from the downturn - saw a 9.2% fall.
Particularly shocking is the fall at key air freight hubs. Hong Kong, the gateway to the Pearl River Delta, which accounts for a third of Chinese manufacturing exports, saw cargo tonnage dip 28.2% in December. Frankfurt, Europe's largest air freight hub which attracts trucked cargo from all over the continent, saw a 26 percent fall.
Anecdotal evidence from airline cargo managers suggests that some markets are performing even worse. Neel Shah, vice president cargo for Delta, says volumes from Japan to the US were down 42 percent in December, a figure he describes as "extremely frightening". Oliver Evans, head of cargo for Swiss, says 30 percent falls are being seen in many markets, but "some significant markets are down more than that".
None of the carriers regard the December figures as a blip, and all say the weakness continued into January. "I am an optimist by nature, but I think that it will get worse before it gets better," Evans says. Shah agrees: "I don't think anyone thinks we have hit the bottom. The first quarter is going to be pretty ugly, and after that, who knows?"
Perhaps the only note of faint optimism comes from Lufthansa, which points out that 2008 saw an unusually strong January, while 2009 has seen automotive factories and construction works taking prolonged holidays, potentially distorting the air cargo figures.
But the carrier nevertheless announced on 30 January that it had reached agreement with its Works Council on short time working in cargo, with Lufthansa Cargo chairman Carsten Spohr saying "adjustment of staffing capacities has become inevitable". The carrier says it has not yet agreed with the Works Council how much time will be cut and when, but expects to do so shortly.
One thing that has been noticeably absent so far is any major suspension of freighter routes by airlines. Cathay Pacific announced that two of its 28 Boeing 747 freighters would be grounded in December, and added a third in January, and Lufthansa Cargo has terminated the lease on three wet-leased freighters. But both carriers are maintaining all their existing freighter routes, albeit with reduced schedules.
Lufthansa says it has not yet grounded any of its own Boeing MD-11 freighters, and Cathay is taking delivery of four new 747-400Fs this year and one conversion. The Hong Kong carrier even plans to go ahead with a new freighter route to Houston and Miami in March. However, it will chiefly use the new capacity to replace its remaining 747-200Fs.
Rupert Hogg, director of cargo for Cathay, doesn't downplay the current situation, but continues to hope for some measure of recovery later in the year. "Clearly there will be a rebasing of demand, and I don't have crystal ball about the future," he says. "But my hope is that inventories will deplete, and that there will then be some re-stocking, albeit not at the same rate as before."
Click here for our recent article looking at the air cargo prospects for 2009