Words like "perhaps", "maybe" and "possibly" are typically used by air cargo managers at present as they contemplate the state of the world economy, and by extension that of the cargo market.
In a perfect storm scenario, the cargo industry was enduring a dreadful first half of 2009 with freight traffic falling 20-30% just as Airbus and Boeing were flat out introducing, or developing, shiny new - and expensive - cargo widebodies in the form of the A330-200F, 747-8F and 777F. The latter arrived in service in the middle of all this last year, while the new A330 and 747 freighters are due to make their debuts before 2010 is out.
Lufthansa Cargo's chief executive Carsten Spohr said in March that "the air-freight industry lost five years of growth in 2009", but the gloomy predictions that cargo might take two or three years to reach 2007-8 levels began to look overstated. But the danger is not over, with the Greek debt crisis and fears that Europe might be heading into a double-dip recession introducing a note of caution once more in late April and early May.
The recovery in traffic in the first quarter was encouraging and produced some eyewatering figures. The International Air Transport Association recorded a 27.8% year-on-year rise in cargo traffic in the first quarter of 2010, a trend that was confirmed by the data for the month of March, which shows a 28.1% rise and puts traffic levels within 1% of the 2008 high.
The recovery seems to be broad based, with Asian carriers up 35.9% in the first quarter, North American airlines increasing by 31.6% and Middle Eastern carriers up 34%. Only European operators have lagged with a rise of just 10.3%.
That left airlines, which earlier in the year were cautious about calling the recovery, sounding a little more relaxed. In January, for example, Cathay Pacific director of cargo Rupert Hogg was worrying that the recovery could have been boosted by short-term factors such as inventory replenishment by importers and the fact that the ramp-up in demand late last year caught Chinese factories on the hop.
In late April he was more optimistic. "Many of the factors I mentioned then still exist, but I think the underlying demand has strengthened too, with IT and consumer electronic companies reporting stronger results and much more activity in the automotive component sector," he said.
Industry bellwether Lufthansa Cargo agreed: "The recovery is continuing and so far we are confident it will continue further. It is mainly out of Asia, but we are also seeing an increasing trend to Asia, and America to Europe is also growing as a weak dollar helps US exporters."
Spohr expects double-digit increase in volumes this year and is "optimistic we can achieve this".
Hogg's one caveat, however, is the expanding financial woe in Europe, which he fears might create a double-dip recession. This worry is shared by Air France-KLM, which points out that "the largest part of the recovery is in intra-Asian markets, and not so much in Europe". Meanwhile, Peter Sedgley, senior vice-president cargo commercial at Emirates, talks of "incredible" demand out of Asia, but describes Europe as "not as frenetic".
One silver lining to this uncertainty is that it does at least seem to be prompting carriers to be restrained about returning capacity to the air-freight market, something that is important if yields are to continue to recover.
The shocking fall in yields was one of the hidden stories of 2009, as carriers scrambled to fill capacity at any price. Lufthansa Cargo was not untypical in losing one-third of its revenue in 2009, creating a record €177 million ($220 million) loss. One-third of this loss was a result of lower volumes and two- thirds because of pricing pressure. At the worst point, yields were over 20% down on pre-crisis levels.
The carrier says yields are now "stable", but have "a step to go" to return to 2007-8 levels. Other carriers paint a similar picture. Air France-KLM, which has had a rigorous focus on yields for the past year, can only say that some progress has been made, but "the way to full recovery is still ahead of us".
A key tool in Air France-KLM's fight to improve yields has been capacity cuts, with the carrier deciding that the only way to stop the red ink was to reduce its freighter capacity to a more sustainable level.
Consequently Air France sold two of the five Boeing 777 Freighters it had ordered as the launch customer of the type and leased out two of its five 747-400ERFs. Meanwhile, KLM leased all four its 747-400ERFs to Martinair, now part of the Air France-KLM Group, enabling that carrier to park its 747-400 freighter conversions.
Excluding Martinair, whose freighter fleet remains at pre-crisis levels, that means Air France-KLM has reduced its fleet of 16 747Fs just a couple of years ago to five widebody freighters today (two 777Fs and three 747-400ERFs). No decision has been reached on a third 777F, due for delivery late next year.
At least one major carrier has taken an even more radical step. Japan Airlines, which has had all-cargo capacity for 51 years and which until recently had a substantial fleet of 12 747Fs, has said it will withdraw from freighter operations completely from October.
Last year also saw the demise of the once mighty Northwest Airlines freighter fleet, phased out after the merger with Delta Air Lines. There have also been one or two cargo airline casualties - most notably MK Airlines, an Ostend-based 747F operator.
Delta clearly prefers belly cargo, where it can be sure of generating positive returns, to freighters, which can lose money hand over fist in slack markets. Air France-KLM also cites the growth in its belly capacity, particularly its new 777-300ERs. It has gone from having 50% of its cargo capacity on freighters a few years ago to just 30% today, and it looks unlikely to reverse that in the medium term.
It would be overstating the case to say that these high-profile withdrawals are part of a wider trend, however. Most carriers that parked freighters during the downturn have already brought some back into service, and say they will return to full utilisation.
Cathay Pacific brought two parked 747-400 converted freighters back in the first quarter and is preparing to reactivate the remaining three in June and July. Lufthansa Cargo returned one stored Boeing MD-11F to service in May, and will revive a second in the summer in time for the August to November peak, leaving just two freighters idle from its fleet of 19 trijets.
Meanwhile, there are several examples of carriers that are expanding their fleets, notably AirBridge Cargo, which took the two 747-400ERFs from Air France, and Thai Airways, which recently started freighter services with two 777Fs leased from US cargo carrier Southern Air. In India, start-up Aryan Cargo is taking two leased MD-11Fs in July and August to add to its three Airbus A310 freighters.
To the relief of the industry, this new capacity has so far been proportional to demand. There were fears that a rush to return parked freighters to service might produce overcapacity, but IATA figures for the first quarter show capacity growth was well behind traffic growth in all markets, and that restraint continued into March. Even in Asia there was only a 12.5% rise in capacity year on year in March, compared with a 34.1% rise in traffic, and Europe was down 5.3% despite a 11.7% increase in traffic.
The optimistic forecast would be for that restraint to continue, helped perhaps by uncertainties about the European economy, while traffic also steadily carries on increasing. The gloomy scenario would be a double dip, with a further round of bloodletting.
And that might prompt more carriers to pursue the Air France-KLM or Japan Airlines route after all.
Read how Lufthansa Cargo managed its way through last year as the cargo market collasped