Air freight traffic falls, but low prices tempt hi-tech industry
Traffic statistics from major freight airports point to a sharp downturn in freight volume last month. Hong Kong International Airport reported a 6.1% fall in cargo tonnage, as compared to September 2010, to 325,000 tonnes. This was despite a 5.4% rise in passenger traffic over the same period. The fall in cargo volumes was driven by a 10% fall in exports. The airport commented that "Europe, North America and Taiwan experienced double-digit declines in overall cargo traffic".
This fall was reflected in Europe’s largest air cargo facility, Frankfurt airport (see Ti Dashboard – Air Cargo: Airports). It saw a 5.3% fall year-on-year in September, with the airport’s management suggesting that overall figures for the year would be less than for those of 2010. Like Hong Kong, Frankfurt saw a 5% growth in passenger numbers for the month.
The falls in cargo volumes are all the more notable in that September marks the start of the period running-up to Christmas; normally the busiest time of the year. However in absolute terms, compared to the previous month, both airports have seen only marginal falls in volume.
There may be some hope for the air cargo sector however, as the chip maker Intel is reporting that inventories of micro-processors are being run at what it calls "lean" levels. Discussing the state of the electronics sector after its recent quarterly results, the company’s senior management observed that the falling cost of air freight was giving the sector options. Paul S. Otellini, Intel’s CEO commented that "it’s now cheaper to ship by air than it was in prior quarters. So our customers have more flexibility than we’ve seen in a couple of quarters. And so I think what you’ve got is them just staging to be cautious and not getting caught on the downside with inventory, but to be ready to pounce on any upside opportunity."
In other words, the falling prices in air freight are tempting customers to drive-down inventories, whilst potentially increasing their demand for moving cargo by air.