Latest news and insights from Australia’s airports

New services deliver freight benefits at Australian airports

Air cargo is seeing a global renaissance, with international air freight trends looking good at Australia’s major east coast airports as they welcome more overseas carriers with passenger services and accompanying cargo space.

Melbourne Airport is a prime example of the upward trend.

“Melbourne Airport’s exports have increased significantly thanks to a string of new airlines and services added to Melbourne’s network,” Melbourne Airport chief of aviation Simon Gandy says.

“Our January 2018 air freight exports totalled 18,306 tonnes overall, 4 per cent higher than the previous record set in January 2016.

“The Asian market in particular proved to be the fastest growing segment, 11 per cent higher in January 2018 compared to January 2016.”

The latest figures from the International Air Transport Association show global freight demand grew by 6.8 per cent in February which, when adjusted for distortions caused by the Lunar New year, translated to a 7.7 per cent increase.

This was the strongest start to a year since 2015 and saw demand outstrip capacity for the 19th month in a row.

The Asia-Pacific, which carries 37 per cent of global air freight, saw freight demand grow by 6.5 per cent.

While there remains concern about a softening in export orders in some countries and a US- China face off,  IATA is still expecting global freight demand growth of 3 per cent and annualised growth in Asia-Pacific cargo volumes of 6 to 7 per cent.

That’s good news for airports and their role as important economic engines in terms of freight.

Most freight is carried in the belly of passenger planes, highlighting the connection between freight and passenger traffic. At Sydney Airport, for example, the split is about 80-20 despite its position as a logistics hub.

Air freight tends to be low-density, high-value goods whose delivery is time-critical, items such as mail, electronics, seafood, jewellery and medical supplies.

There are also some differences between domestic and international freight markets.

The Deloitte Access Economics  Connecting Australia report commissioned by the Australian Airports Association notes that from 2009-10 to 2014-15, both major and regional airports experienced a gradual decline in domestic air freight.

This saw tonnes of freight carried from 472,400 tonnes in 2009-10 to 390,300 tonnes in 2015-16.

This trend reversed in 2016-17 when there was a 15 per cent increase to 450,000 cargo tonnes and Deloitte expects this to continue.

By contrast, the volume of international air freight in terms of tonnes carried increased by an average of 3 per cent annually over the last decade, from 755,000 tonnes in 2006-07 to over one million tonnes in 2016-17.

The high value nature of the goods is highlighted by the fact that it represents just 0.1 per cent of Australia’s freight in terms of weight but almost 21 per cent of freight by value.

“The strong growth in air freight has been supported by the increasing international demand for Australian perishable agricultural products such as livestock and fisheries products,’’ the report notes.

“The strong growth in international passengers, coupled with an increasing number of wide-body aircraft has helped provide additional capacity for international freight movements.”

Australia’s four biggest capital city airports account for 97 per cent of all international freight with Sydney responsible for almost half of the total, Melbourne 28 per cent, Brisbane 12 per cent and Perth 10 percent.

There has been a strong increase in air freight through all four airports in the last decade with Perth Airport leading the field at 56 per cent.

However, the end of the resources boom saw freight at Perth level off, with aircraft movements remaining static between financial year 2016 and fiscal 2017.

Tonnages for the first nine months of the 2018 financial year were significantly below those of fiscal 2017, according to the airport, but the good news is this is attributed to one-off factors in 2017.

Management says the airport has now returned “to a more normal year”.

At Sydney Airport, air freight export revenue has grown by 21 per cent since 2014 as tonnage exported increased from 133,800 to 188,400.

But total freight declined marginally from 408,000 tonnes to 400,000 tonnes as imports declined, according to another study by Deloitte Access Economics.

Sydney exports a wide range of goods and a recently released Deloitte report on the airport’s economic contribution to the nation calculates its freight activities added $6.9 billion in direct value to the economy in 2017.

The purchase of inputs required to manufacture exports, resulted in a further $6.5 billion in indirect value added.

Among the most significant export items were professional, scientific, and controlling instruments; office machines and telecommunication equipment; medicinal and pharmaceutical products; and transport equipment.

Brisbane Airport has also seen good growth in both exports and imports. Exports grew 7 percent to more than 71,000 tonnes in the year to February, while imports burgeoned by 20 per cent to over 48,000 tonnes.

The airport says export volumes have grown steadily in the past five years while import volumes dipped during 2016 before rebounding in 2017-18 to exceed 2014 levels.

A major impetus for the growth has been new direct passenger services.

Japan air freight volumes grew 22 per cent in the year following the introduction of the Qantas service between Narita and Brisbane.

Canada air freight volumes rose 42 per cent in the year following Air Canada’s service to Vancouver, while China volumes increased 44 per cent thanks to year-round services from China Eastern, Hainan Airlines and Air China.

Other growth markets for the year ending Feb 2018 include the US (8 per cent), Vietnam (88 per cent), Thailand (39 per cent), Malaysia (56 per cent) and South Korea (18 per cent).

Airport officials say one area of significant growth has been meat exports/imports, which are up 22 per cent on the back of stronger demand for Queensland beef.

They say the airport has sufficient capacity to cope with the increased freight for a number of years and no material changes to logistics infrastructure planned for the near future.

In terms of regional airports, Gold Coast Airport has emerged as something of a star.

It experienced what Deloitte describes as a “notable increase” in air freight from 63 tonnes in 2006-07 to 7,293 tonnes in 2016-17.

Airport management attributed the increase to the start of long-haul services in and out of the Gold Coast from 2007 as well as significant domestic growth.

Photo above: Freight operations at Toowoomba Wellcamp Airport.

By Steve Creedy

About Steve Creedy

An award-winning journalist, Steve began covering aviation in the United States in the early nineties before returning to Australia later that decade and editing The Australian’s aviation section for 17 years. He is editor of Airline Ratings and has co-authored books on industry initiatives aimed at reducing greenhouse emissions.

Steve has joined the AAA to write interesting and informative editorial on the aviation industry.

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