August yield warning for coming months? ponders WorldACD
AirCargo archive stories issue 233
Tuesday, 18 November 2014
POSITIVE developments make it likely that 2014 will generate the highest air cargo revenue since 2011, according to new data from WorldACD.
August showed year-over-year (YoY) volume growth of 6.6 per cent. Revenues (in USD) increased by 7.4 per cent. Specific product categories again performed better than general cargo (volume +7.8 per cent and yield +1.4 per cent), while the volume of express cargo grew by almost 10 per cent.
YoY yields improved for the fourth month in a row, driven by Europe, North America and the Middle East & South Asia (MESA). Volume growth also came from Asia Pacific (+13 per cent) Africa and Central America. The world wide yield increase was less than in previous months, possibly a warning signal for the months ahead, said a spokesperson for WorldACD.
Of the 30 largest city pairs, Shanghai-Chicago grew in volume by 66 per cent. Hong Kong-Los Angeles and Hong Kong–London followed with growth of, respectively, 32 per cent and 22 per cent: All three also showed a yield increase. The worst performing of these top O&D’s was Hong Kong–Tokyo with volume minus 11 per cent and yield minus three per cent. Of this top 30, 20 had an origin in Asia Pacific and six in Europe (5x Frankfurt and 1x London). As for incoming business, MESA was strongest (revenue + 16 per cent), followed by North America (+12 per cent).
Foreign airlines take the largest part of the growth in each major region. The origin with the highest YoY revenue growth is Asia Pacific, but the growth goes mainly to carriers from MESA. The second growth region is Europe, where MESA-airlines grew fastest, followed by the North American carriers, whilst Europeans profited least. And in North America the situation was similar: MESA-airlines led the growth, but the North American carriers lagged behind.
The answer to which dynamics are at work may be found in part by monitoring changes in sales networks: What is a carrier’s retention rate among agents, which ‘new’ agents does it work with, which agents are ‘lost’, are the changes in each category related to volume, to yield or to both? WorldACD has begun researching this subject, and made a high-level comparison between July 2013 and July 2014.
Air cargo revenue in July 2014 increased by nine per cent YoY. Revenue made by airlines through ‘retained’ agents increased by eight per cent (thanks to additional volume), with airlines from Asia Pacific achieving the highest growth (+12 per cent). In analysis, they performed best in generating additional revenue through agents with whom they had also worked a year earlier. In Africa and MESA, airlines saw a decline in revenue generated through their retained agents.
Through its agent name standardisation program, WorldACD was able to segment the retained agents by size and found the smaller size agents appear to account for two-thirds of the absolute growth between July 2013 and July 2014. “Lost and new agents each represented about 25 per cent of the total number of agents the average carrier did business with,” said WorldACD. “This significant number shows that carriers may not enjoy long term relationships with a sizeable part of their agent network. Monitoring changes in distribution may be helpful in building such relationships.”
August yield warning for coming months? ponders WorldACD
AirCargo archive stories issue 233
Tuesday, 18 November 2014
POSITIVE developments make it likely that 2014 will generate the highest air cargo revenue since 2011, according to new data from WorldACD.
August showed year-over-year (YoY) volume growth of 6.6 per cent. Revenues (in USD) increased by 7.4 per cent. Specific product categories again performed better than general cargo (volume +7.8 per cent and yield +1.4 per cent), while the volume of express cargo grew by almost 10 per cent.
YoY yields improved for the fourth month in a row, driven by Europe, North America and the Middle East & South Asia (MESA). Volume growth also came from Asia Pacific (+13 per cent) Africa and Central America. The world wide yield increase was less than in previous months, possibly a warning signal for the months ahead, said a spokesperson for WorldACD.
Of the 30 largest city pairs, Shanghai-Chicago grew in volume by 66 per cent. Hong Kong-Los Angeles and Hong Kong–London followed with growth of, respectively, 32 per cent and 22 per cent: All three also showed a yield increase. The worst performing of these top O&D’s was Hong Kong–Tokyo with volume minus 11 per cent and yield minus three per cent. Of this top 30, 20 had an origin in Asia Pacific and six in Europe (5x Frankfurt and 1x London). As for incoming business, MESA was strongest (revenue + 16 per cent), followed by North America (+12 per cent).
Foreign airlines take the largest part of the growth in each major region. The origin with the highest YoY revenue growth is Asia Pacific, but the growth goes mainly to carriers from MESA. The second growth region is Europe, where MESA-airlines grew fastest, followed by the North American carriers, whilst Europeans profited least. And in North America the situation was similar: MESA-airlines led the growth, but the North American carriers lagged behind.
The answer to which dynamics are at work may be found in part by monitoring changes in sales networks: What is a carrier’s retention rate among agents, which ‘new’ agents does it work with, which agents are ‘lost’, are the changes in each category related to volume, to yield or to both? WorldACD has begun researching this subject, and made a high-level comparison between July 2013 and July 2014.
Air cargo revenue in July 2014 increased by nine per cent YoY. Revenue made by airlines through ‘retained’ agents increased by eight per cent (thanks to additional volume), with airlines from Asia Pacific achieving the highest growth (+12 per cent). In analysis, they performed best in generating additional revenue through agents with whom they had also worked a year earlier. In Africa and MESA, airlines saw a decline in revenue generated through their retained agents.
Through its agent name standardisation program, WorldACD was able to segment the retained agents by size and found the smaller size agents appear to account for two-thirds of the absolute growth between July 2013 and July 2014. “Lost and new agents each represented about 25 per cent of the total number of agents the average carrier did business with,” said WorldACD. “This significant number shows that carriers may not enjoy long term relationships with a sizeable part of their agent network. Monitoring changes in distribution may be helpful in building such relationships.”
