The top 50 cargo carriers: FedEx, UPS top rankings, but Middle East grows at fastest rate

Cargo carriers made few strides in tonnage in 2013, according to World Air Transport Statistics from the International Air Transport Association.

The ranking of the top five cargo carriers remained unchanged compared to 2012. With lagging volumes the norm, almost every carrier interviewed by Air Cargo World talked about a focus on moving perishables.

Americas

FedEx held tight onto its No. 1 spot for total cargo, its tonnage increasing by about 2.1 percent. FedEx declined to comment for this story.

UPS Airlines again came in second for total cargo, though its total tonnage declined by 10.6 percent, according to IATA’s statistics. But for Q2 of 2014, volume was up by 7.2 percent, with projects for the rest of the year of a little more than 5 percent increase in the U.S. and 4-6 percent increase in international, Mark McCloud, UPS Airlines CFO, says.

Export volume growth was up 9.1 percent, with the strongest growth coming from Europe and Asia.

“We’re really excited about expanding service to customers in emerging markets in Asia, the Middle East, Europe and the Americas,” McCloud says. “We’re keeping a close eye on emerging markets, and have created a business unit focused on developing opportunities in the Indian subcontinent, Middle East and Africa.”

UPS Airlines is promoting free trade agreements (FTAs) including the Transatlantic Trade and Investment Partnership – a FTA between the European Union and the U.S. – and the Trans-Pacific Partnership – a FTA between 12 countries in Asia Pacific and the Americas.

“By reducing barriers to trade, these FTAs have great potential for improving the world’s economy, creating jobs and improving standards of living all over the planet,” McCloud says.

UPS is also expanding its international facilities, including adding 70 percent sort capacity to its European air hub in Cologne, Germany, and opening a new Trans-Pacific hub in Taiwan.

Back home, Q2 saw UPS’ strongest domestic growth (+7.4 percent) in more than a decade. The business-to-consumer segment drives most of UPS’ growth in the U.S., McCloud says.

“This is fueled by the ever-increasing rise in e-commerce, and now, m-commerce. In our most recent quarterly earnings announcement, we also noted an increase in our B2B segment,” he says.

McCloud reports substantial growth in deferred services such as Second Day Air and Next Day Air Saver.

UPS’ Next Day Air Early A.M., which guarantees early morning delivery for time-critical shipments, is growing, McCloud says. The carrier recently expanded the service’s coverage area for the second time in five months.

LAN Airlines, part of the LATAM Airlines Group, ranks as the 15th cargo carrier in the world, but it holds the No. 3 spot for the Americas. LAN had a 2 percent increase in scheduled freight tonnes carried in 2013.

During Q2 of 2014, cargo revenues at LATAM, which also includes TAM Airlines, decreased by 12.7 percent and capacity fell by 7.5 percent.

“Results this quarter were negatively affected by reduced passenger and cargo demand during the FIFA World Cup soccer tournament held in Brazil,” LATAM said in its quarterly report. “The most significant impact affecting the cargo business during the second quarter 2014 were very weak seed exports, which resulted in a decline of almost 70 percent in tonnes of seed transported in April 2014 as compared to April 2013.”

Middle East

While Middle East-based carriers improved their tonnage figures, the 2013 statistics showed that only Etihad Airways significantly jumped spots (from No. 21 in 2012 to No. 16 in 2013).

Emirates SkyCargo was the No. 3 carrier in the world for total cargo, but No. 1 for international freight. The airline saw a 7.1 percent jump in scheduled freight tonnes carried compared to 2012.

Pradeep Kumar, Emirates senior vice president for revenue optimization and systems, cargo, says the Middle East region continues to perform well.

“In the [Gulf Cooperation Council], infrastructure developments continue to drive the need for materials and supporting logistics,” Kumar says. “This is particularly noticeable in the UAE, Saudi Arabia and Qatar. A thriving and growing consumer society with spare capital to invest and a growing tourist industry, are all signs of on-going positive momentum for growth.”

Ulrich Ogiermann, chief officer cargo for Qatar Airways (No. 13), also says the Middle East is doing well. Qatar saw a 12.4 percent jump in its scheduled freight tonnes carried in 2013.

“The Middle East is benefitting from the stability of the traffic flows from East to West and the increased demand for perishable products being supplied to the rapidly expanding consumer population in the GCC countries,” Ogiermann says. “Multiple large construction projects as well as the oil and gas industry in Qatar and other GCC countries also ensure heavy demand for import flows.”

Kumar of Emirates mentions solid growth in Africa and a comeback in the U.S. Emirates recently started freighter flights to Atlanta and increased capacity to Chicago. Kumar also says more export volumes are coming out of Europe and points in Asia Pacific such as China.

“After several months of flat market conditions in Q1, we have witnessed rebound in market activities in the second quarter across the regions,” Kumar says. “With an upturn in world economy, the trade and business confidence picked up resulting in an improved performance for SkyCargo. Apart from robust growth in the Middle East and Africa regions, both Asia and Europe regional also contributed to the overall growth of nearly 6 percent in second quarter.”

Between September and October, Emirates will launch service to Oslo, Brussels and Budapest.

Ogiermann predicts that just about every region in the world but North America will do well for Qatar Airways.

“If we look at the current trend of increased cargo traffic between Africa and Asia, Africa emerges as one of the most promising markets in the near term,” he says. “In addition to Africa, we expect to see increased cargo traffic to and from South America and the CIS region. Finally, overall imports to the Middle East from Europe will continue to play an important role for airfreight.”

Emirates reports a healthy general freight business and increasing demand for pharmaceuticals and other perishables. The airline expanded its perishable handling capacity with the recent opening of the freighter terminal at Dubai World Central’s Al Maktoum International Airport.

Emirates SkyCargo is also expanding its cargo handling facilities at Dubai International Airport. It is slated for completion by May 2015.

In addition to pharma, Ogiermann says Qatar also sees growing demand in the charter business, especially in construction, livestock and oil and gas. He says the airline is almost doubling its charter flights year over year.

Qatar Airways is upgrading services to Vienna, Moscow and Perth, Australia, between September and October. Beginning in November, the airline will increase operations to Madrid.

Asia

Korean Air Cargo was the No. 4 carrier in the world for total cargo. Its tonnage decreased by 6 percent compared to 2012.

But Korean Air’s freight has shown demand growth, says Byeok Jin Kim, general manager and team leader of the airline’s cargo product marketing team. In Q1 of 2014, Korean Air Cargo transported 285,961 tonnes, a 12.7 percent increase year over year. Korean Air’s sales volume reached 2.9 trillion Korean won (US$2.8 billion), 1.8 percent higher than that of last year.

“Although the growth rate of the air cargo market has somewhat slowed down due to the stagnation in emerging economies such as China, Korean Air’s second quarter sales outcome is expected to be 1.6 percent higher than that of the first quarter,” Kim says. “To cope with the decrease in industrial products cargo, Korean Air is actively engaged in the development of niche markets like fresh cargo and pharmaceutical cargo.”

After the signing of the Canada-South Korea FTA in March, Korean Air began a cargo route between Incheon and Halifax, Canada, to transport live lobster.

“As the demand for fresh cargo is diverse according to the region and season, there is a need to develop new demand through an in-depth analysis,” Kim says. “Such development of the fresh cargo market will be the driving force in the growth of the airfreight market.”

Cathay Pacific Airways remained in its No. 5 position for total scheduled freight tonnes carried, though its tonnage decreased by 2.1 percent compared to 2012. In the first half of 2014, the Cathay Pacific Group, which includes Dragonair, reported cargo revenue rose by 3.4 percent year over year. Yield decreased by 6.9 percent.

“Overcapacity in the industry remains a major concern and has made it difficult to increase rates,” Cathay said in its report.

The airline has concentrated on branching out. Its subsidiary Cathay Pacific Services Limited officially unveiled the Cathay Pacific Cargo Terminal at Hong Kong International Airport in February. With an annual handling capacity of 2.6 million tonnes, the new terminal is a common facility serving all airlines at Hong Kong Airport.

Europe

Overall, European carriers slipped in the IATA rankings compared to 2012. Lufthansa was the top European cargo airline, but it fell two positions to No. 12 this year. Its total tonnage remained virtually unchanged.

“What we see is 2014 is not the best cargo year in history,” says J. Florian Pfaff, vice president area management Germany, at Lufthansa Cargo. “It’s now a few years in a row that we don’t really see a recovery in the demand for air cargo worldwide. There are obviously some regions where we have better development than others, but if you see it from a global perspective, we are not content with the overall business climate we’re in.”

Pfaff says Germany fares well for Lufthansa Cargo, but other places in Europe such as Italy and Scandinavia are declining. Though the airline sees some increases lately out of Asia, Pfaff says it remains to be seen whether it is sustainable. Overall, Latin America is stable.

Pfaff says Lufthansa Cargo is concentrating on its growth area: special products such as express, pharmaceuticals and dangerous goods. General cargo is not doing as well.

“That is the product where we see the biggest decline,” he says.

Lufthansa’s winter route schedule will be released by the beginning of October. Pfaff says twice a year, Lufthansa management from around the world meets for network day. The executives review the airline’s routes, including those served by freighters, and explore whether these are profitable.

“We react on the market demand,” Pfaff says. “That’s why we have reduced capacity when it is necessary.”

British Airways’ IAG Cargo (No. 18) saw a 5.7 percent decrease in total tonnage in 2013. During Q2 of 2014, IAG Cargo’s revenue fell 12 percent compared to the same period last year. IAG Cargo attributed this to the airline’s move in May to use capacity on Qatar Airways-operated freighters, in the process returning three B747-8 freighters it had leased.

The airline said this reduced freighter program meant reduced capacity and therefore diminished revenue.

In the first half of 2014, Lufthansa increased its load factors to about 70 percent. Pfaff says capacity management is important for the airline.

“I think that is the big task we have at Lufthansa Cargo in order to remain profitable,” Pfaff says.