F2F Class Notes (Mason)[w]

Original 

The first slide is the YTD (year to day) import and export airfreight cargo volume from PVG to worldwide, 2018 compare to 2017. The data resource is come from Pactl which is one of the major terminal in PVG. it is a general trend of the market.
You can find there are two places, I highlighted, which is the volume decreasing for AI in Feb and AE in Mar,
The major decreasing reason for AI is the Chinese Spring Festival holiday in this year is in the middle of Feb, that was later than previous years. So the volume of import had a big drop. During the holiday a lot of factories were closed down about two weeks. The same reason that was also impacted the volume decreasing in Mar for AE.
Overall, the whole market is in an increasing stage. YTD for AI there is about 5% increasing and for AE it’s nearly 8% increasing.

The 2nd one is about the Brent oil index, as you know that the oil price takes the big part of the airfreight cost, so we would like to share with you the Brent oil index within the year.
From the chart, the lowest is 46, the highest is 80, that was from July of last year to May of this year, within less than one year, the oil price was keeping increased almost double. So the trend of the airfreight rate will getting increased.

Market information summary
In 2017, from last year, the airfreight market was very hot, especially in Q4 and the rate increased quite high, there were a lot of rate and capacity issues. In 2018, Forwarders intend to block more BSA by a fixed rate to minimise their risk. So the BSA percentage was increased a lot.
In last year, the BSA percentage was about 40-50%, but in this year, the BSA percentage was increased to 70-80%, even some carriers signed out 100% their capacity.
In reality, the whole market is ok, but not so strong as the expected.

The current situation.
About Global service suspension of NCA since the middle of Jun
NCA airline is a major freighter carrier. They have 11 freighters back to the operations. But now there are 9 freighters on the ground by technical problem, only 2 freighters are on operating. So the capacity to TPEB (trans pacific Eastbound) has a big issue. (We are losing about 3000tons capacity transit from pacific to eastbound)to TPEB)

In general Jun & Jul, which are not a critical seasons. But since the CN-US tariff war, from the end of Jun, airfreight demand was increasing a lot, some parts of ocean shipments were switched to air. So the whole air market to TPEB is more critical now.
To the end of the year, overall the capacity in the whole market will not have a big increasing. For commercial airlines, they will maintain their current capacity in the market. But there will be some new capacity from Jul.
From 20th of Jul, UW started to operate 3 flights a week from Wuhan to LGG (Liege Airport). And WE operated scheduled flights from Changsha to Chicago from Jul 21.
So overall, the whole market in the 2nd half year will has a slight increase.

That’s all the market information for air portion.

Revision

The first slide is the YTD (year to date) import and export airfreight cargo volume from PVG to worldwide, 2018 compared with 2017. The data resource comes from Pactl which is one of the major terminals in PVG. It highlights general trends of the market.
You can find there are two places I highlighted, which are the volume decrease for AI in Feb and AE in Mar.
The major reason for the decrease for AI was because the Chinese Spring Festival holiday this year was in the middle of Feb, which was later than previous years. So the volume of imports had a big drop. During the holiday a lot of factories were closed down for about two weeks. This is the same reason that the volume of AE in Mar decreased compared to 2017.
Overall, the market is in an growth stage. As of June, 2018 there is about a 5% increase for AI and a 8% increase for AE.

The second slide (graph) is about the Brent oil index. As you know the oil price is big part of the airfreight cost, so we would like to share with you the Brent oil index for the year.
From the chart, the lowest is price is 46, the highest is 80. (USD/Barrel)

From July, 2017 to May 2018, the price of oil doubled. As a result, the rate of airfreight will also increase.

Market information summary
In 2017  the airfreight market was very hot, especially in Q4. As the airfreight rates increased, there were a lot of cost and capacity issues. In 2018, freight forwarders intended to block more BSA with a fixed rate to minimize their risk. So the BSA percentage has increased a lot.
Last year, the BSA percentage was about 40-50%, but this year, the BSA percentage increased to 70-80%. Some carriers even signed out to 100% of their capacity.
In reality, the whole market is stable, but not as strong as expected.

The current situation
About Global service suspension of NCA since the middle of Jun
NCA airlines is a major freight carrier. They have 11 freighters in operation. But now there are 9 freighters on the ground due to technical problems, and only 2 freighters are operating. Therefore, capacity for China-to-US freight has been an issue. We are losing about 3000 tons of transit capacity from our China-to-US routes.
In general Jun & Jul are not a critical seasons. But since the CN-US tariff war, since the end of Jun, airfreight demand has been increasing a lot. Some ocean shipments were switched to air. So the whole air market for our China-to-US routes is more critical now.
At the end of the year, overall capacity in the whole market will not have a big increase. Commercial airlines will maintain their current capacity in the market. But there will be some new capacity from Jul.
From the 20th of Jul, UW started to operate 3 flights a week from Wuhan to LGG (Liege Airport). And WE operated scheduled flights from Changsha to Chicago from Jul 21.
So overall, the whole market in the 2nd half of the year will have a slight increase.

That’s all the market information for the air portion.