Malaysia’s growth, stability and workforce cited as reasons for move
PHILADELPHIA, KUALA LUMPUR, April 3, 2012 – BDP International has opened another Global Services Center (GSC) in Petaling Jaya, Malaysia. The U.S.-based, global logistics and transportation services firm opened its first such center in Kuala Lumpur in March 2008.
“Its impressive economic growth and political stability made Malaysia an extremely attractive place to increase our investment in the region,” said Richard Strollo, managing director of BDP South Asia. “It has a substantial manufacturing base, is a major oil exporter and is situated on a key international trade route. What resonated most, however, was the extraordinary quality of the country’s workforce, both in terms of skill sets, motivation and productivity.”
The new center will offer the same services as the first center, including import/export container and shipment tracking, SAP data entry, shipment data entry and billing and documentation, as well as Import Security Filing for ex-USA shipments. It will use standard operating procedures developed in the first center in serving its predominantly U.S. and European clients. In addition it will work with clients to customize the processes they outsource to BDP.
The new center is now fully operational, bringing together total of 125 number of logistics professional staffing the company’s two service centers. Directing the activities of both is Paramalingam Mahalingam, general manager of BDP Global Services Centres, who reports directly to Strollo.
Source BDP International
DANISH shipping giant Maersk Line has announced it will impose general rate increases (GRIs) for Asia to US west and east coast-bound cargo from May 1.
For Asia-US west coast services, the rates will increase US$400 per TEU, $500 per FEU, $565 per 40-foot high cube and $630 per 45-foot high cube container, according to its company statement.
For Asia-US east coast loops, the GRI will be $560 per TEU, $700 per FEU, $790 per high cube and $885 per high cube box.
Source Shipping Gazette - Daily Shipping News
FITCH RATINGS, one of the top three rating agencies with Moody's and Standard & Poors, says banks have been pulling back from ship financing due to the downturn within the industry, worsened by increasing funding pressures in the banking sector.
Low charter rates, driven by an oversupply of ships, has caused a steep drop in the value of ship fleets, resulting in rising loan-to-value ratios, said the report.
Fitch said it expects industry overcapacity to continue until 2014, when increased scrapping rates, reduced ship order books and an improvement in global demand should bring the market closer to equilibrium.
Overcapacity is specific dry bulk, container and crude tanker sectors, for which the 2008 order book was exceptionally large. The oversupply of ships, coupled with lacklustre growth in world trade, has caused a significant drop in shipping charter rates, it said.
"Asian banks have increased their activity in ship financing in recent years but are mainly active in their home region, with a significant global expansion unlikely in the near term," said the report, while "euro-funded banks are finding US-dollar funding more costly and less accessible, making financing new business less attractive".
The difficulty in financing ships is worsened by the reduced availability of other lenders, which limits the scope for syndication and makes shipping loans more difficult to exit, it said.
"Significant new ship orders in 2008 mean that a large amount of new ships are expected to enter world fleets in 2012-2013. Combined with subdued growth in global demand, there is now significant overcapacity in the industry," the report said.
"Opportunities for banks remain, particularly in stronger-performing shipping segments such as liquefied natural gas (LNG) transportation and offshore," said the Fitch Ship Financing Report.
"Banks that can maintain market presence in the near term may also benefit from higher margins in the short-term and fewer competitors once the industry recovers," said the report.
Fitch said it expects impaired loans and impairment charges relating to ship finance to continue at heightened levels or increase somewhat in 2012 and 2013. However, bank ratings already factor in this risk, so any ratings impact is unlikely.
"Shipping is a highly cyclical industry meaning that credit ratings for shipping companies tend to be sub- or low-investment grade and so absorb higher amounts of risk-based capital. Further deterioration in the credit quality of shipping exposures would increase the risk weightings of ship finance in banks' balance sheets - and hence their capital charge," said the report.
Source Shipping Gazette - Daily Shipping News
NEW ZEALAND's Ports of Auckland (PoA) has reversed itself, ending the contracting of independent stevedores to hire replacements for the 300 dockers it sacked last month in the course of bitter contract talks.
The decision to re-instante the sacked dockers came before an Employment Court hearing. This means the dockers will work while the PoA and the Maritime Union of New Zealand [MUNZ] return to the bargaining table.
PoA chief executive Tony Gibson said his plan to bring competitive stevedoring to the strike-plagued port was "on hold", saying he was "acutely aware" customers and their businesses were being hurt by the dispute, reported London's Containerisation International.
"PoA has listened to wishes of the court, as well as the views of the mayor and all other stakeholders," said Mr Gibson. Union president Garry Parsloe said he was "elated" by the decision. "We're going to tell our blokes that it's back to work," he said.
Source Shipping Gazette - Daily Shipping News
DENMARK's AP Moller-Maersk is considering whether to invest US$83 million in the construction of a proposed new navigational channel at Port Said's Suez Canal Container Terminal (SCCT), according to the Egyptian Ministry of Transport, reports UK's Port Technology International.
Situated at the mouth of the Suez Canal on the Mediterranean Sea, the terminal is being expanded in a Phase II development project, to double capacity from 2.7 million TEU to 5.4 million TEU per annum.
APM Terminals, part of the same Danish shipping conglomerate, holds 55 per cent in SCCT, a private joint venture that began operations in 2004.
The Phase II expansion project will also double the quay length from 1,200 metres to 2,400 metres, deepen the terminal's draft to 16 metres, and will equip the terminal with an extra 12 super-post Panamax cranes, which will bring the number of such cranes at the facility to 24.
Source Shipping Gazette - Daily Shipping News
TIBET plans to invest CNY9.5 billion (US$1.5 billion) in road transport construction this year including mainline highways, rural highways and highways for border defence and linking temples, reports Xinhua.
The Tibetan government will work out solutions of road connectivity for 411 villages and 17 rural towns, and invest CNY300 million in building roads linking temples, said a statement of the region's transport department.
The region invested CNY8.5 billion in 15 transport projects to build 4,600 kilometres of new highways in 2011, growing to 63,000 kilometres and linking 273 villages. At the same time, an expressway from Lhasa to Gonggar Airport has opened, brought to an end the region's history without a single expressway.
Tibet will invest CNY46.17 billion in road transportation by 2015 according to its development plan, growing 178 per cent against the previous five years.
Source Shipping Gazette - Daily Shipping News
THE US Harbour Maintenance Tax (HMT) is like having the "government tax McDonalds to build bigger Burger Kings", California Democratic Congresswoman Grace Napolitano told a congressional committee hearing recently.
"We must correct and fix this inequity," she told the House Water Resources and Environment Subcommittee, referring to a tax where the bulk of the money is raised from busier ports to pay weaker rival ports, who pay far less, to compete more effectively.
Ms Napolitano said it was unfair to the Port of Los Angeles and Long Beach, which receives US$265,000 from the Harbour Maintenance Trust Fund (HMTF), but contributes $220 million, so rival ports can take cargo away from southern California.
She said a minimum amount should be appropriated to the port where the money is raised, and the fund should pay all costs maintaining harbours deeper than 45 feet, reported American Shipper. Today, fund only pays all costs for ports with less than a 45 foot draft; local governments or port authorities must fund the rest themselves if they have more than a 45-foot depth.
Minnesota Republican Congressman Chip Cravaack said there was a $7.1 billion surplus in fund which should be used for dredging. "Why are we having such difficulties getting our harbours to the widths and depths that are needed?"
On the subject of the 2013 budget for the Army Corps of Engineers, which contracts such work, Ohio Republican Congressman Bob Gibbs, chairman of the committee, said President Barack Obama only wants to spend half the money collected in the HMTF, which is funded by the Harbour Maintenance Tax, a 0.125 per cent tax on the value of imports.
"Once again, only two of the nation's 10 largest ports are at their authorised depths and widths. The president's budget does nothing to ensure the competitiveness of American products in world markets. That hurts businesses and costs us jobs," said Mr Gibbs.
President Obama asked $4.7 billion for the Army Corps of Engineers to spend, which was 5.5 per cent less than Congress authorised in 2012, Mr Gibbs said.
While Mr Gibbs said he supported cutbacks in federal spending, many of the Corps of Engineers' activities are "true investments in America because they provide economic return and jobs".
Major General Meredith (Bo) Temple said the Corps of Engineers was restrained by both the need to prioritise dredging projects and the limited amount of money that is appropriated.
"There is no question that constrains us in most cases from providing the authorised dimensions of the channels," General Temple said. "It is our purpose to ensure that the channels are of sufficient dimensions to ensure the safety and economic success of that particular harbour."
Source Shipping Gazette - Daily Shipping News
THE air cargo industry's practice of levying surcharges has been attacked for being an "easy means of fixing prices", according to European Shippers Council air freight policy adviser Joost van Doesburg.
Mr van Doesburg said that surcharges ought to be a part of the overall rates, he told London's International Freighting Weekly. His comments followed the European Commission awarding fines totalling EUR169 million (US$225.5 million) to some of the biggest air forwarders in the industry.
"Once again, there is proof that something is wrong with surcharges in the supply chain," said Mr van Doesburg.
"We want to change the system so that it is much more transparent and shippers can clearly calculate their costs. Surcharges should be for a short period of time, or be an actual expense. We don't want to pay surcharges for years when they should be part of the rate."
The European Competition Commission found that prior to 2007, Agility Logistics, Beijing Kintetsu World Express, Ceva and EGL, DHL Global Forwarding, DSV Air & Sea, Exel, Expeditors Hong Kong, Hellmann Worldwide Logistics, Kuehne + Nagel, Nippon Express, Panalpina, Schenker, UTi Worldwide, Toll Global Forwarding, UPS (as successor of Menlo Worldwide Forwarding) and Yusen Shenda Air & Sea Service (Shanghai) were in different ways involved in four cartels.
Said Mr van Doesberg: "The ESC really hopes that this activity belongs in the past and that freight forwarders will understand that price-fixing is not profitable or good for business."
Source Shipping Gazette - Daily Shipping News
DUBAI International Airport air freight volumes increased 6.5 per cent year on year in February to 157,492 tonnes, bolstering hopes of a recovery in the global air cargo this year
This after global air freight volume dropped eight per cent in 2011, according to data compiled by the International Air Transport Association (IATA).
A report by Dubai's National said economists, airlines and aircraft manufacturers expect the market will rebound this year, with Middle Eastern carriers anticipating continued growth this year.
In 2011 airlines based in the Middle East achieved a 9.4 per cent increase in demand, mainly due to Emirates Airline and Etihad Airways expanding their air cargo networks.
"Air traffic globally, including cargo, will be on the road to recovery and there might be some upside surprises," said Kelvin Lau, a transport analyst at Daiwa Securities Capital Markets in Hong Kong. "The picture will be better in the second half."
Said Etihad Airways cargo vice president David Kerr: "Etihad Airways' cargo operations saw outstanding performance in 2011 and volumes are continuing to grow in 2012 in line with capacity increases and network expansion."
Mr Kerr said cargo accounted for 20 per cent of the airline's overall revenue in 2011, with average monthly loads of 25,000 tonnes.
"In the first quarter of this year, we have seen a comparably strong performance. We expect March volumes to be very good as operations into and out of China pick up. European and American demand has also been strong and we forecast strong performance into the second quarter," he said.
Said Emirates cargo vice president Pradeep Kumar: "We are seeing strong performances into Africa, South America, especially Brazil, and Asia, mainly in areas such as temperature-sensitive (pharmaceutical) cargo and mobile phones."
"Other areas may remain under pressure until the second half, but then we see growth consolidating," he said.
IATA director general Tony Tyler said the global air freight market looked more promising, "It appears that freight markets have stabilised."FAXTEXT = Boeing's latest market review said it expected Asia to lead the air freight recovery, after IATA reported air cargo volumes in Asia Pacific declined every month year-on-year for the 12 months to the end of January.
Source Shipping Gazette - Daily Shipping News
ATLAS Air Worldwide Holdings, a global provider of outsourced aircraft and aviation operating services, has announced that its Atlas Air, Inc. unit has commenced Boeing 767 cargo services in North America for DHL Express under a long-term CMI (Crew, Maintenance and Insurance) contract.
The new service on behalf of the international express shipping company further expands Atlas Air's asset-light CMI service solution, which was launched in 2010. The company said in a statement that it expects CMI to be a strategic driver of increased revenues and earnings and improved business mix.
"By growing our CMI operations, we continue to diversify our business mix while at the same time strengthening our long-term relationship with DHL Express," said William Flynn, president and chief executive officer.
Under the agreement, Atlas Air will operate five Boeing 767-200 freighters owned by DHL in the express shipping company's North American network. The first of these aircraft started service in March and all five are expected to be operational by the third quarter of 2012.
Atlas crews will operate the aircraft on behalf of DHL on routings to and from its customer's Cincinnati hub. Depending on routes flown, the eventual five aircraft are expected to generate a total volume of approximately 130 to 150 block hours per aircraft per month.
The business also highlights Atlas Air's expansion into a new aircraft type, the Boeing 767, which is expected to become an important model in the company's fleet going forwards. The company's 767 freighter operations are said to complement its Boeing 747 freighter operations.
The company, through its Polar Air Cargo Worldwide subsidiary, also provides time-definite, 747-400 freighter network service to DHL, primarily in transpacific trade lanes.
"Our new 767 service for DHL Express is another milestone event for Atlas," Mr Flynn added. "It shows that we are executing on the strategies that are central to our business plan, demonstrates growth of our asset-light CMI business and represents an expansion of our relationship with DHL Express. It also underscores our growth into a key new equipment type and is symbolic of where we are taking the company."
Source Shipping Gazette - Daily Shipping News
2012-04-03
For the second time in a row, MAN has emerged the number one among European manufacturers of commercial vehicles in Russia. With sales of over 7,600 trucks and 220 buses, MAN reached pre-crisis order volumes in fiscal year 2011.
Its market share for trucks of more than 12 tons was 26 percent in 2011 in the European brand segment. “Efficient transportation solutions, reliable vehicles, and the satisfaction of our customers are the three pillars of our strategy,” said Lars Himmer, Head of the MAN CIS Sales Region and Director of MAN Truck & Bus RUS. “Last year we saw clear signs of recovery on the Russian market. Our range of products places us in the vanguard of the growing trend toward efficient and ecologically sound vehicle concepts and will enable us to continue strengthening our position there,” emphasized Himmer.
As recently as the end of 2011, MAN was able to conclude two major orders in Russia. 2,188 engines ordered by the company LIAZ have already been delivered. They will mainly be used to equip city buses in Moscow as well as in St. Petersburg and other Russian cities. The order for 50 MAN city buses from the city of Vladivostok shows that MAN’s reputation in Russia is growing.
Russia is an important sales market in MAN’s international growth strategy. In order to consolidate itself further still on the Russian market as a successful manufacturer of efficient commercial vehicles, MAN is investing around €25 million in setting up its own production facility in St. Petersburg.
The middle of 2012 will see MAN start production of heavy TGS WW trucks with Euro 4 engines. In the medium term, the St. Petersburg site is set to reach a production capacity of around 6,000 vehicles a year.
Source MAN SE
2012-04-03
MAN Diesel & Turbo has received an order from the US-based cruise liner company Norwegian Cruise Line (NCL) for the maintenance of the engines on nine cruise liners. The order is worth US$ 30 million.
The service agreement runs for four years and is being handled by the MAN PrimeServ service office in Fort Lauderdale, Florida, USA. Besides the maintenance work it also covers the supply of spare parts. During the term of the agreement, two further Norwegian cruise ships will be put into service which will then also be incorporated into the contract. The order is worth US$ 30 million.
“The order from Norwegian Cruise Line represents a milestone for MAN Diesel & Turbo and for our service brand MAN PrimeServ,” says Dr. Stephan Timmermann, the Executive Board Member of MAN Diesel & Turbo responsible for the Engines & Marine Systems and After-Sales Strategic Business Units. “It is one of the first service agreements of its kind with one of our major customers and constitutes a key After-Sales success in a very exciting cruise liner business.”
To date, 52 MAN engines with 542 cylinders from various series have been produced for Norwegian Cruise Line’s vessels, including the world’s first Common Rail large-bore diesel engine in 2007. The company’s next ship with MAN engines will be launched in April 2013.
Source MAN SE
2012-04-03
Chopin Airport meets over 90 per cent of IATA's recommendations for good practice in baggage handling, as shown by the analysis carried out as part of the Baggage Improvement Programme (BIP). The Warsaw airport is one of 200 airports around the world that have been invited to participate in the programme by the International Air Transport Association (IATA).
BIP aims to reduce the average baggage mishandling rate of 18.86 per 1000 passengers by 50%, resulting in $1.9 billion worth of savings for the aviation industry.
"Our goal is to ensure that 100% of bags flying to/from Warsaw will reach their destination on time and intact. This is what our passengers expect from us," said Michał Hofman, head of Chopin Airport's Passenger Handling Service.
Participation in BIP is voluntary, but requires an invitation from the association. Chopin Airport is the only airport in Poland, and one of five in East-Central Europe to have been invited to the programme.
Implementation of the BIP project involved the appointment of a team of experts, comprising representatives of the airport, airlines, the two biggest ground handling agents and state services. Based on thorough analysis and observation, the team concluded that Chopin Airport baggage handling processes required only minor modifications. For example, baggage check-in agents should be careful to place bags flat on the conveyor belt and use baggage trays more often. It is also important to inform sorting agents and the airline if the bag is seized for additional security screening. The team is also considering installing scanners on the inbound conveyor belts in order to quickly check whether a given bag has been sent to the baggage reclaim hall, as well as educating passengers about baggage handling activities carried out at the airport and how to prepare their bags for the journey.
"Our suggestions and conclusions have been submitted and approved by PPL's Management Board. They will be implemented soon and we expect our rate of mishandled baggage to improve significantly this year," said Michał Hofman.
Source Warsaw Chopin Airport
Geneva - The International Air Transport Association (IATA) released global traffic results for February 2012 showing an 8.6% improvement in passenger demand and a 5.2% rise in cargo demand compared to the same month in the previous year.
Several factors inflated February 2012 results and distorted comparisons with the year-ago period. These included weaker traffic during the Arab Spring a year ago and the occurrence of Carnival in Brazil in February, a month earlier than in 2011. Cargo demand was also subject to positive distortion by the occurrence of Chinese New Year in January which pushed some deliveries into February. When comparing to January 2012 levels, the picture becomes much more moderate, with passenger demand growing by 0.4% and cargo demand declining by 1.2%.
Global passenger capacity expanded by 7.4% compared to previous-year levels, lagging behind the 8.6% increase in demand. This has had a positive impact on load factors, which airlines have maintained at 75.3%—better than the 74.4% recorded in February 2011.
Freight demand continued to be relatively stable. This trend started to develop in September 2011 and is consistent with improvements in business confidence.
“The outlook is fragile. Improvements in business confidence slowed in February. This will limit the potential for business class travel growth and it implies that an uptick for cargo is not imminent. At the same time, airlines trying to recoup rising fuel costs could risk reduced volumes on price sensitive market segments. Weak economic conditions and rising fuel costs are a double-whammy that an industry anticipating a 0.5% margin can ill-afford,” said Tony Tyler, IATA’s Director General and CEO.
International Passenger Markets
International air travel stood 9.3% above February 2011 levels. Capacity expanded by 7.3% and load factors stood at 74.4%. It should be noted that except for Asia-Pacific, all regions saw demand expand ahead of capacity when compared to February 2011.
Asia-Pacific carriers saw a 5.9% increase in demand with a 6.2% increase in capacity. Load factors stood at 75.4%. Following a small spike in international travel over the Chinese New Year period in January (6.4% growth) February traffic declined.
European carriers saw a 7.6% increase in international demand, well ahead of the 5.0% increase in capacity. This growth occurred despite the continuing sovereign debt crisis and weakened consumer confidence. Load factors stood at 74.4%, up significantly from the 72.6% recorded for February 2011.
North American carriers showed the weakest growth in demand at 4.9%, which was still ahead of 4.3% growth in capacity over the previous year. The average load factor was the lowest among the major regions at 72.1%. While this performance was weak in comparison to other regions, it was significantly better than January, when international demand contracted by 0.3%. This improvement follows strengthened consumer confidence and economic conditions.
Middle East carriers posted 23.4% international growth which is distorted by the poor performance in February 2011 owing to the impact of the Arab Spring. Capacity growth stood at 16.1%. Average load factors for the region showed the most dramatic improvement to 76.9% in February 2012 compared to 72.4% in the previous year. Stripping out the distortions, we estimate that the region has now fully recovered.
African carriers also saw a positively distorted performance in February due to the Arab Spring with 24.7% growth in demand and 20.2% growth in capacity. The first impacts of the Arab Spring were felt in the Northern Africa region—primarily Egypt and Tunisia. Load factors for the region stood at 62.7%. Although this was the lowest among all the regions, it was significantly better than the 60.5% for February 2011. Our estimate is that African carriers have fully recovered from the traffic losses resulting from the Arab Spring.
Latin American airlines posted a 13.3% increase in demand against a 10.8% increase in capacity. Load factors stood at 78.3%, the highest among the regions and well ahead of the 76.6% achieved for February 2011. Carriers in the region benefitted most from the traffic spike on Brazil routes associated with Carnival.
Domestic Passenger Markets
Overall domestic demand expanded by 7.6%, only slightly ahead of the 7.5% increase in capacity. Average load factor was 76.7%, which was higher than the 74.4% achieved on international routes.
Brazil experienced the fastest growth in February compared to the previous year. Demand was up by 17.9%, but lagged behind the 20.9% increase in capacity. Load factors stood at 66.5%, the weakest with the exception of Japan.
India experienced the second strongest growth among the major domestic markets at 12.3%. This lagged behind the 16.3% increase in capacity over previous-year levels. Nonetheless, India’s carriers filled 75.4% of seats. The strong traffic growth masks financial weakness resulting from high operating costs and taxation.
China’s domestic market stood at 10.1% above previous-year levels. This is significantly down from the 17.3% growth in January owing to strong Chinese New Year traffic. Load factors were the highest among domestic markets at 79.3%.
The US domestic market saw considerably improved performance in February with 5.2% demand growth. After keeping capacity flat for several months, demand improvements were met with a 4.4% increase in capacity. Load factors strengthened to 78.8%
Japanese domestic performance continues to suffer from the impact of last year’s earthquake and tsunami combined with a tightening of capacity due to industry restructuring. Demand was 8.8% below previous-year levels while capacity stood at -6.0%. Load factors were the weakest among the major domestic markets at 61.4%.
Air Freight (Domestic and International)
Air freight volumes increased in February from a year ago by 5.2%. This was largely as a result of cargo shipments that were postponed in January due to the Chinese New Year holiday and the comparison to the previous year which was impacted by weak demand associated with the Arab Spring. Air freight volumes showed a decline on January’s performance of 1.2%.
Cargo growth was led by Middle East carriers with an 18.2% increase in demand which was matched exactly with an 18.2% increase in capacity. The largest volume contributor to February’s growth, however, was the Asia-Pacific region which posted a 10.2% year-on-year gain.
European and North American carriers saw year-on-year declines in cargo traffic of 1.4% and 0.3% respectively. Latin American airlines saw the most significant decline with a 3.6% fall compared to previous-year levels.
African carriers posted growth of 3.2%% over the previous year demand levels but on very small volumes.
The Bottom Line
“We are ending the first quarter with a considerable amount of uncertainty. While the threat of a European financial meltdown seems more remote than it did only a few months ago, the political risks that aviation faces are growing. The rapid increase in the price of oil is already biting hard. The UK is increasing the onerous Air Passenger Duty. Europe is adding to the burden with the inclusion of international aviation in its emissions trading scheme—the extra-territorial aspects of which are creating the possibility of a trade war that nobody can afford. The exact conditions vary from country to country, but around the world we see ill-conceived policy initiatives that over-regulate, excessively tax or otherwise restrain the aviation industry. This prevents it from being the catalyst for economic growth that it can be,” said Tyler.
The latest study by Oxford Economics on the global benefits of aviation calculates that the industry supports 56.6 million jobs and enables $2.2 trillion of economic activity. With 35% of the value of goods traded internationally travelling by air, the connectivity provided by air transport is one of the key enablers of global business.
“Aviation has transformed the world into a global village. We did this even while making profit margins of less than 1% in a policy framework best described as ‘tax-and-restrict’ in many markets. Aviation could achieve much more with competitiveness-enabling policies that support sustainable growth,” said Tyler.
Source IATA
Several factors inflated February 2012 results and distorted comparisons with the year-ago period. These included weaker traffic during the Arab Spring a year ago and the occurrence of Carnival in Brazil in February, a month earlier than in 2011. Cargo demand was also subject to positive distortion by the occurrence of Chinese New Year in January which pushed some deliveries into February. When comparing to January 2012 levels, the picture becomes much more moderate, with passenger demand growing by 0.4% and cargo demand declining by 1.2%.
Global passenger capacity expanded by 7.4% compared to previous-year levels, lagging behind the 8.6% increase in demand. This has had a positive impact on load factors, which airlines have maintained at 75.3%—better than the 74.4% recorded in February 2011.
Freight demand continued to be relatively stable. This trend started to develop in September 2011 and is consistent with improvements in business confidence.
“The outlook is fragile. Improvements in business confidence slowed in February. This will limit the potential for business class travel growth and it implies that an uptick for cargo is not imminent. At the same time, airlines trying to recoup rising fuel costs could risk reduced volumes on price sensitive market segments. Weak economic conditions and rising fuel costs are a double-whammy that an industry anticipating a 0.5% margin can ill-afford,” said Tony Tyler, IATA’s Director General and CEO.
International Passenger Markets
International air travel stood 9.3% above February 2011 levels. Capacity expanded by 7.3% and load factors stood at 74.4%. It should be noted that except for Asia-Pacific, all regions saw demand expand ahead of capacity when compared to February 2011.
Asia-Pacific carriers saw a 5.9% increase in demand with a 6.2% increase in capacity. Load factors stood at 75.4%. Following a small spike in international travel over the Chinese New Year period in January (6.4% growth) February traffic declined.
European carriers saw a 7.6% increase in international demand, well ahead of the 5.0% increase in capacity. This growth occurred despite the continuing sovereign debt crisis and weakened consumer confidence. Load factors stood at 74.4%, up significantly from the 72.6% recorded for February 2011.
North American carriers showed the weakest growth in demand at 4.9%, which was still ahead of 4.3% growth in capacity over the previous year. The average load factor was the lowest among the major regions at 72.1%. While this performance was weak in comparison to other regions, it was significantly better than January, when international demand contracted by 0.3%. This improvement follows strengthened consumer confidence and economic conditions.
Middle East carriers posted 23.4% international growth which is distorted by the poor performance in February 2011 owing to the impact of the Arab Spring. Capacity growth stood at 16.1%. Average load factors for the region showed the most dramatic improvement to 76.9% in February 2012 compared to 72.4% in the previous year. Stripping out the distortions, we estimate that the region has now fully recovered.
African carriers also saw a positively distorted performance in February due to the Arab Spring with 24.7% growth in demand and 20.2% growth in capacity. The first impacts of the Arab Spring were felt in the Northern Africa region—primarily Egypt and Tunisia. Load factors for the region stood at 62.7%. Although this was the lowest among all the regions, it was significantly better than the 60.5% for February 2011. Our estimate is that African carriers have fully recovered from the traffic losses resulting from the Arab Spring.
Latin American airlines posted a 13.3% increase in demand against a 10.8% increase in capacity. Load factors stood at 78.3%, the highest among the regions and well ahead of the 76.6% achieved for February 2011. Carriers in the region benefitted most from the traffic spike on Brazil routes associated with Carnival.
Domestic Passenger Markets
Overall domestic demand expanded by 7.6%, only slightly ahead of the 7.5% increase in capacity. Average load factor was 76.7%, which was higher than the 74.4% achieved on international routes.
Brazil experienced the fastest growth in February compared to the previous year. Demand was up by 17.9%, but lagged behind the 20.9% increase in capacity. Load factors stood at 66.5%, the weakest with the exception of Japan.
India experienced the second strongest growth among the major domestic markets at 12.3%. This lagged behind the 16.3% increase in capacity over previous-year levels. Nonetheless, India’s carriers filled 75.4% of seats. The strong traffic growth masks financial weakness resulting from high operating costs and taxation.
China’s domestic market stood at 10.1% above previous-year levels. This is significantly down from the 17.3% growth in January owing to strong Chinese New Year traffic. Load factors were the highest among domestic markets at 79.3%.
The US domestic market saw considerably improved performance in February with 5.2% demand growth. After keeping capacity flat for several months, demand improvements were met with a 4.4% increase in capacity. Load factors strengthened to 78.8%
Japanese domestic performance continues to suffer from the impact of last year’s earthquake and tsunami combined with a tightening of capacity due to industry restructuring. Demand was 8.8% below previous-year levels while capacity stood at -6.0%. Load factors were the weakest among the major domestic markets at 61.4%.
Air Freight (Domestic and International)
Air freight volumes increased in February from a year ago by 5.2%. This was largely as a result of cargo shipments that were postponed in January due to the Chinese New Year holiday and the comparison to the previous year which was impacted by weak demand associated with the Arab Spring. Air freight volumes showed a decline on January’s performance of 1.2%.
Cargo growth was led by Middle East carriers with an 18.2% increase in demand which was matched exactly with an 18.2% increase in capacity. The largest volume contributor to February’s growth, however, was the Asia-Pacific region which posted a 10.2% year-on-year gain.
European and North American carriers saw year-on-year declines in cargo traffic of 1.4% and 0.3% respectively. Latin American airlines saw the most significant decline with a 3.6% fall compared to previous-year levels.
African carriers posted growth of 3.2%% over the previous year demand levels but on very small volumes.
The Bottom Line
“We are ending the first quarter with a considerable amount of uncertainty. While the threat of a European financial meltdown seems more remote than it did only a few months ago, the political risks that aviation faces are growing. The rapid increase in the price of oil is already biting hard. The UK is increasing the onerous Air Passenger Duty. Europe is adding to the burden with the inclusion of international aviation in its emissions trading scheme—the extra-territorial aspects of which are creating the possibility of a trade war that nobody can afford. The exact conditions vary from country to country, but around the world we see ill-conceived policy initiatives that over-regulate, excessively tax or otherwise restrain the aviation industry. This prevents it from being the catalyst for economic growth that it can be,” said Tyler.
The latest study by Oxford Economics on the global benefits of aviation calculates that the industry supports 56.6 million jobs and enables $2.2 trillion of economic activity. With 35% of the value of goods traded internationally travelling by air, the connectivity provided by air transport is one of the key enablers of global business.
“Aviation has transformed the world into a global village. We did this even while making profit margins of less than 1% in a policy framework best described as ‘tax-and-restrict’ in many markets. Aviation could achieve much more with competitiveness-enabling policies that support sustainable growth,” said Tyler.
Source IATA
The certifiers for seven MSC certified mackerel fisheries in the North East Atlantic ocean have suspended the fisheries’ certificates.
The suspension notice follows two years of catches above the scientific advice as a result of a significant increase in the amount of mackerel caught by countries outside the certified fleets and the breakdown of international agreements and negotiations aimed at managing the stock. In July 2010, the certified fisheries were notified that – in order to maintain their certification and ecolabel – total catches in the North East Atlantic mackerel fishery would need to be brought back under an internationally agreed management regime. This included the catches from countries outside the certified fleets. The deadline for implementing that notification expired on 31st December 2011.
While the MSC certified fisheries have worked hard to reach an international agreement on mackerel management, it proved impossible to find a solution in time for the deadline. As a result, in January the fisheries were given 90 days’ notice that their certificates would be suspended at the end of March 2012. Any mackerel caught after 30th March is not eligible to be labelled as ‘MSC certified’.
The fisheries affected are:
- Danish Pelagic Producers Organisation North East Atlantic mackerel (DK)
- Irish Pelagic Sustainability Association western mackerel (IE)
- Irish Pelagic Sustainability Group western mackerel pelagic trawl fishery (IE)
- North East Atlantic mackerel pelagic trawl, purse seine and handline fishery (NO)
- Pelagic Freezer Trawler Association North East Atlantic mackerel (NL)
- Scottish Pelagic Sustainability Group North East Atlantic mackerel (UK)
- Swedish Pelagic Producers Organisation North East Atlantic mackerel (SW)
Nicolas Guichoux, Europe Director of the Marine Stewardship Council said: “While the suspension of these MSC certificates is disappointing for both the fisheries and the MSC, there is a risk that the stock would become depleted as a result of the current TAC overshoot. I know that the fisheries involved are making enormous efforts to ensure that this does not happen and the MSC will continue to support these mackerel fisheries throughout this difficult process. I look forward to the reinstatement of their certificates once an agreement has been reached.”
Suspension, not withdrawal
The suspension is not the same as a certificate withdrawal as suspended certificates can be re-instated on completion of a condition with no need for a new Full Assessment of the fishery.
Source MSC
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