Strong Signs for Air and Sea Cargo

February 25th, 2015 - Low oil prices bring promise of growth

This year has started positively for the air and sea freight markets although uncertainty remains.

“It looks like a promising year for Europe because of the low euro, low interest rates and low oil prices,” says Georges Van Hove, manager of airfreight corporate procurement at Bolloré Logistics in Paris. “Those factors could all stimulate growth in the Eurozone which would boost trade.”

Globally, Van Hove expects modest growth in the global air-cargo trade of between 4% and 5%, quite similar to last year which landed at 4.3%.

However, uncertainties remain since some airlines such as Middle Eastern carriers Qatar Airways and Emirates Airlines have changed their pricing structure, scrapping fuel and security surcharges and adopting all-in rates.

“We are seeing the end of fuel surcharges because the price of jet fuel is so low,” says Van Hove. He expects other cargo carriers such as Germany’s Lufthansa and Air France potentially to follow suit.

To be sure, the fuel surcharge has been the subject of much debate in recent months as oil prices more than halved last year.

Van Hove hopes that more of the market will adopt all-inclusive rates. “We don’t want a situation in six months where different airlines adopt different pricing structures,” he says. “That could lead to uncertainty, which is bad for trade.”

In the shipping freight market, low fuel prices will also be positive for the results of the shipping companies but so far they have not passed those savings onto their customers.

“We don’t see lower oil prices having an impact on rates yet,” says Denis Sanguinetti, sea freight procurement manager for Bolloré Logistics in Paris. “This is especially true on some of the biggest trades such as Asia to Europe where the shipping companies are trying to recoup some of their losses.”

Last year, freight rates fell on most routes. However, the biggest companies such as Denmark’s Maersk, CMA CGM of France or Switzerland’s Mediterranean Shipping Company were less affected. “These groups have the biggest ships that are the most fuel-efficient and that can benefit from economies of scale,” Sanguinetti continues.

The same factors such as the weak euro, the falling oil price and stronger demand could help sustain growth in the sea freight market in 2015 of between 4% and 5%, Sanguinetti says. That’s about the same as last year.

The weaker euro against the dollar could have another effect. It could boost exports from Europe to Asia, reversing the trend of the past decade and more.

This could be the start of a rebalancing of trade flows between the eastern and the western worlds,” Sanguinetti says.

Key Figures
  • 20%

    More fuel-efficient for the Boeing 787 and the Airbus A350

  • 70%

    of Urbanisation is expected by 2050

  • 27

    mega-cities are expected by 2050, with at least 10 million people, compared to 1...

  • +18,4%

    of growth for E-commerce retail market in Europe in 2015

  • 82%

    of goods are moved by road

  • 1 billion

    Population in Africa

  • 60%

    of Africa’s population will be urbanized by 2050

  • 7,5%

    of growth for Indian GDP in 2014

  • 4,9%

    of growth for African GDP in 2016

  • 6,1%

    of growth for East Asian GDP in 2015, the world’s fastest-growing region

  • 19 224 teus

    transported by the MSC Oscar, the largest container ship in the world

  • 396 m

    is the size of the MSC Oscar ship

  • 120 h

    is the Non-Stop Flight Record done by Solar Impulse

  • 4,5%

    of growth in 2015 for Global Airfreight demand