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Confidential – not for third party distribution © Accenture 2018 0 accenture.com/seaburyconsultingConfidential – not for third party distribution © Accenture 2018
Air Cargo Market and Airport Capacity Trends
ACI conference, Brussels
18 June 2018
Confidential – not for third party distribution © Accenture 2018 1
Air cargo industry overview
The air cargo market experienced strong demand growth in 2017 growth which is continuing into 2018; in
the meantime capacity growth is mainly in Middle East and Asia airports
▪Capacity and demand growth are
roughly in line in the first months of
2018
▪Scheduled belly capacity remains
dominant over freighter capacity
▪Airports in Middle East and Asia are
top growers in belly capacity..
▪ .. and they are also the top growing
regions for freighter capacity
▪Air cargo demand surged in 2017
with growth in nearly all trade lanes
and commodities
▪Growth is continuing into 2018,
albeit at a slightly slower pace
▪Mail parcels and eCommerce
continue to outperform the market…
▪… resulting in lower average weight
per express shipment and
investments from key logistics
players
Air cargo market trends Capacity trends
Confidential – not for third party distribution © Accenture 2018 2
Recap of 2017 shows a strong positive growth for the air cargo industry…
YoY Growth (%)
Demand recovery after a strong first half 2017 continues, pushing global load factor up; gross yields have
increased by 7% compared to last year
Notes: Market yields based on IATA cargo eChartbook (until September 2017); FTK & ATK data includes December 2017
Source: IATA eChartbook; IATA Monthly Traffic Results; IATA Air Freight Monthly Analysis; Seabury Consulting analysis (March 2018)
Recent demand growth outpaced capacity, allowing load factors to recover
20
-5
-15
-10
0
10
5
15
’14 ’15 ’16 ’17
44
52
0
48
45
46
47
49
50
51
53
54
’15’14 ’17’16
2.5
3.0
0
0.5
1.0
1.5
2.0
’14 ’15 ’16 ’17
+7%
Surcharges Net yield
Int. load factor developmentFTK/ATK (%)
Gross airline yields $/kg (quarterly average)
Global capacity
(ATK)
Global demand
(FTK)
YoY growth (%)
+4%
Confidential – not for third party distribution © Accenture 2018 3
…and the first quarter of 2018 still shows significant growth
YoY air trade growth, 2018 Jan – Mar%1
Global air trade grows 9.4% during 2018YTD; European import and export are showing double-digit growth
on most trade lanes
1) Growth in terms of weight; Data excludes UN Comtrade; thickness of arrows is representative of Jan-Mar 2018 trade lane size in tonnes
Source: Seabury Global Trade Database and Dashboard (June 2018)
Global air trade growth: 9.4%
Confidential – not for third party distribution © Accenture 2018 4
Air trade growth is reflected in the declining Inventory to Sales (I/S) ratio
US Inventories and Sales, 1998 – Mar 2018 (Trillion US$)
US inventories continue to steadily increase, while sales are only recovering recently; the Inventory to Sales
ratio growth is on a downward trend, for the first time in the last ~6 years
Source: U.S. Census Bureau, Seabury Consulting analysis
The reducing I/S ratio has a positive effect on US air import growth
8
-16
1.6
16
4
1.2
1.8
0.8
-4
0.0
1.0
0
12
1.4
2.0
-12
-8
20
20001998 2002 2004 2006 2008 20162010 2012 2014 2018
Inventories
I/S ratio YoY growth (right axis)
Sales
YoY growth (%)
Recent continuous
decline of the I/S
ratio growth
Confidential – not for third party distribution © Accenture 2018 5
Strong air trade growth for nearly all industries in the first quarter of 2018
Industry summary Jan - Mar 2018Air weight change (metric tons) and growth (%)
Top / bottom commodities Jan - Mar 2018Air weight change (1,000 tons) and % growth
Major industries continue to experience double digit air trade growth; machinery parts, perishables and raw
materials have contributed most to air cargo volume growth
Source: Seabury Global Trade Database, Seabury Global Air Trade Dashboard; Seabury Consulting analysis
Automotive showed strongest relative growth in the first quarter of 2018
Asparagus
Fresh Salmon
-5
Vehicle Engine Parts
Integrated circuits
Skincare
Roses
Dresses
10
-5Lettuce
Blazers
Cell phone parts
15
14
10
10
-4
-6
-7
15%
33%
15%
25%
35%
-4%
-12%
-60%
-35%
-21%
Confidential – not for third party distribution © Accenture 2018 6
Growth in Chinese air exports spearheaded by the East & South
China’s air exports by region, 2000-2017Million tonnes, CAGR %
Chinese shipper locationsShipper location, air volume
China East and China South air exports continue to grow strongly even with their large base volumes; this is
reflected in the larger number of air exporting than importing shippers
Sources: Seabury Global Trade Database, Seabury China Shipper Database, Seabury Consulting analysis
20152000 2010
1.0
20050.0
0.5
1.5
2.0
2.5
China North
China South
China East
China West
Imports
Exports
2000-2017
% CAGR
7%
10%
10%
34%
2017
Importing shippers are mainly concentrated around Shanghai
China East and South show largest absolute air export growth
Confidential – not for third party distribution © Accenture 2018 7
Top 3 shippers drive growth of pharmaceuticals into China
Top 10 Pharma importing shippers1
YoY growth, air weightKey pharma origin regions for top 10 shippers1
Air weight, 2017
Top 3 pharma shippers drive weight growth into China with most pharma imported into Beijing and
Shanghai; most of the air pharma originates from Europe, both for growth and volumes
1) Measured by air weight import of pharmaceuticals; Source: Seabury China Shipper Trade Database
Pharma import provinces for top 10 shippers1
Air weight (tonnes), 2017
1
2
3
4
5
0 5000
Beijing
Shanghai
Jiangsu
Zhejiang
Liaoning
Cool pharma Non-cool pharma
YoY % growth
Europe North
America
Latin
America
AfricaAsia
Pacific
Middle
East &
South Asia
2017 weight growth
2016 air trade weight
Confidential – not for third party distribution © Accenture 2018 8
Strong growth for mail parcels seen in Seabury data, quoted by the Economist
Source: The Economist
Strong growth in mail parcels last decade, outpacing air and ocean trade growth
Confidential – not for third party distribution © Accenture 2018 9
eCommerce continue to decrease the average weight per express shipment
Air express vs. shipment weight trendsMillion air shipments
Seasonality pattern in weight per shipment (WPS)Weight per shipment (kg)
Since 2010 air express average shipment size dropped by 20% due to the impact of increased eCommerce
shipments; an additional decrease in weight per shipment is seen pre-Christmas
Source: Seabury Express Database, Seabury Consulting analysis
Structural end of Q4 decline in weight per shipment assumed due to
e-commerce growth in international air express
Weight per shipment (kg)
Christmas
Holiday
ramp up
12.5
13.0
13.5
14.0
14.5
15.0
15.5
16.0
16.5
17.0
2013201120092007100
20172015
120
240
140
160
180
200
220
260
280
# shipments (left axes)
weight per shipment (right axes)
11.0
11.5
12.0
12.5
13.0
13.5
14.0
14.5
15.0
15.5
May JulJan AprFeb Mar Jun Aug Sep Oct Nov Dec
2016
2017
Drop in air express
during crisis in 2009
followed by fast recovery
Confidential – not for third party distribution © Accenture 2018 10
eCommerce effects are seen in the investment behavior of major industry players
Source: Reuter.com; Air Cargo News
Cainiao is investing 15.6 Billion USD in smart logistics and selected 5 airports to be their global hubs:
Hangzhou, Dubai, Kuala Lumpur, Liege and Moscow
Confidential – not for third party distribution © Accenture 2018 11
Air cargo industry overview
The air cargo market experienced strong demand growth in 2017 growth which is continuing into 2018; in
the meantime capacity growth is mainly in Middle East and Asia airports
▪Capacity and demand growth are
roughly in line in the first months of
2018
▪Scheduled belly capacity remains
dominant over freighter capacity
▪Airports in Middle East and Asia are
top growers in belly capacity..
▪ .. and they are also the top growing
regions for freighter capacity
▪Air cargo demand surged in 2017
with growth in nearly all trade lanes
and commodities
▪Growth is continuing into 2018,
albeit at a slightly slower pace
▪Mail parcels and eCommerce
continue to outperform the market…
▪… resulting in lower average weight
per express shipment and
investments from key logistics
players
Air cargo market trends Capacity trends
Confidential – not for third party distribution © Accenture 2018 12
70
80
90
100
110
120
130
140
150
YoY (%): 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 20181
FTK -3% -9% 23% 1% -1% 2% 6% 3% 4% 10% 5.7%
ATK 1% -7% 10% 6% 2% 3% 6% 7% 5% 4% 6.4%
2017 demand growth outperforms capacity growth
Global air cargo traffic (FTK) and supply (ATK), 2008 – April 2018Index (Jan 2008 = 100)
In seven of the last ten years capacity growth (ATK) has outpaced demand (FTK); where demand growth
significantly exceeded capacity growth in 2017, the first months of 2018 show a stronger capacity growth again
1) Year-to-date, actuals until April 2018; International traffic, seasonality adjusted. Source: IATA Monthly Statistics; Seabury Consulting analysis (June 2018)
Near flat line
134
143Steady capacity
growthDemand
and supply
out of sync
Global air cargo traffic (FTKs)
Global capacity (ATKs)
Near flat line
Steep traffic
growth
Confidential – not for third party distribution © Accenture 2018 13
DXB airport saw the largest wide body belly capacity increase since 2007
Wide body scheduled belly uplift capacity growth by airport, 2007-2017Thousand tonnes
The Chinese airports saw large contribution of domestic capacity to their overall growth whereas the other
airports growth was driven by international capacity
Note: Capacity excludes narrow body passenger; All capacity shown is scheduled capacity only;Source: Seabury Capacity Legs database; Seabury Consulting analysis
996
353
IST
999
661
302
491 454
334
JEDCAN
260 249
DXB PEK
782
HKG ICN TPE CTU
498
284
661491 410
192
161336 273 260 202
DOH
% CAGR
(2007-2017)
Largest
contributor
International
Domestic
8% 9% 14% 4% 20% 13% 4% 7% 4% 23%
EmiratesAir China
LimitedQatar Cathay
Turkish
Airlines
China
SouthernKorean Saudia EVA air
Air China
Limited
Confidential – not for third party distribution © Accenture 2018 14
Scheduled freighter capacity increased by 1.3 m tons compared to 13 m for belly
Scheduled Capacity growth, 2007-2017
Million tonnes
There were clear winners and losers in terms of freighter capacity, where DXB and ANC saw the biggest
loss in capacity and DOH and DWC gained the largest amount of freighter capacity since 2007
1) Includes combi aircraft; Note: All capacity shown is scheduled capacity only; Source: Seabury Capacity Legs database; Seabury Consulting analysis
Dubai’s freighter capacity shifted from DXB to DWC
WB Belly Freighter1
32
40
312007
2017
growth
28
13
DOH
IST
DWC
HKG
SVO
CGO
HAN
PVG
TSN
LGG
449
644
503
448
403
337
262
285
270
257
Top 10 Frt capacity growers, ‘07-’17
Thousand tonnes
Top 10 Frt capacity decliners, ‘07-’17
Thousand tonnes
KIX
DXB
-631ANC
CDG
PEK
BKK
TPE
JFK
MFM
NRT
-933
-369
-326
-293
-282
-237
-200
-189
-170
+3,857K
tonnes
- 3,631K
tonnes
Confidential – not for third party distribution © Accenture 2018 15
Memphis and Louisville among world’s largest cargo airports
Capacity uplift by airport, Jan-May 2018Thousand tonnes
Large international hubs mainly have international capacity and larger wide body belly capacity shares due
to passenger widebody bellies
Source: Seabury Capacity Legs database; Seabury Unscheduled Capacity database (preliminary version); Seabury Consulting analysis
LEJ
MEM
ICN
HKG
PVG 85%
100%
87%
100%
100%DXB
100%
720
TPE
93%SDF
89%
75%CVG
807
1,735
217
1,261
845
1,155
1,085
230Domestic
International
62%
100%
55%
720
74%
59%
45%
100%
100%
99%
1,261
1,735
1,155
1,085
845
807
230
217
89%
38%
41%
WB Belly
Freighter
Integrator hubs
Top 5 largest airports
Confidential – not for third party distribution © Accenture 2018 16
Seabury’s capacity data can now also be viewed in a comprehensive dashboard
Top 10 airlines by capacity, Jan – Jun 2018Total capacity in tonnes and YoY % growth
Top 10 airport by capacity, Jan – Jun 2018Total capacity in tonnes and YoY % growth
Emirates is the largest carrier in terms of scheduled capacity, with Turkish Airlines growing strongly year to
date
Source: Seabury Capacity dashboard
DXB airport has limited freighter capacity
because that is routed via the nearby DWC airport
17Confidential – not for third party distribution © Accenture 2018
For more information, please contact…
Seabury Consulting
E-mail:
Cell:
Phone:
Website: www.accenture.com/seaburyconsulting
Managing Director
Marco Bloemen
+31 61 472 0413
+31 20 880 4240
