Air Cargo Development in the Americas

Air Cargo Development in the AmericasCongreso ALACAT 2013Guayaquil, Ecuador

May 20-22, 2013

2 Air Cargo Development in the AmericasCongreso ALACAT 2013, Guayaquil, Ecuador

May 20-22, 2013

LeighFisher has offices in Chicago, Cincinnati, Dallas, London, New Delhi, Ottawa, San Francisco, Toronto, and Washington, D.C. For over 65 years, we have assisted our clients in achieving their vision and goals. We have extensive practical experience in all disciplines necessary for the planning and management of airports, including airfield and airspace analyses, airport management and operation, commercial and concession planning, forecasting and economics, facilities planning and design, federal funding and policy development, financial analysis and planning, financial feasibility and reporting, ground transportation planning, air quality analysis, noise and other environmental analyses, privatization, parking planning and analysis, rental car facility development and business planning, security planning and implementation, and simulation and operational analyses.

Joy Banerjee

[email protected]

+1.650.579.6404

Worldwide Air Cargo Indicators

Air Cargo Trends in the Americas― North America― Latin America

Conclusions

Questions & Answers

Agenda Outline

WorldwideAir Cargo Industry Indicators


May 20-22, 2013

Growth in supply of air cargo capacity outpaced demand growth, putting pressure on load factors and yields

Worldwide Freight Tonne Kilometres (FTK) and Available Tonne Kilometres (ATK) Growth

Source: IATA

-25-20-15-10

-505

101520

253035

20122011201020092008

FTKATK

Year

ove

r Yea

r Gro

wth

(Per

cent

)


May 20-22, 2013

…but the long term relationship between GDP growth and FTK growth has changed

World FTK Growth/GDP Growth

Source: World Bank, ICAO, IMF, LeighFisher analysis

4

3

2

1

0

6

-1

-2

-60

-61

2011

2010

2009

2008

2007

2006

2005

2004

5

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

1985

1984

1983

1982

1981

1980

Factor FTK Growth / GDP Growth (2001-2010)Factor FTK Growth / GDP Growth (until 2000)

FTK

Grow

th/G

DP G

row

th

Average 1980-2000: 2.44 Average* 2001-2011: 0.53

Note:* excluding 2001, 2009 data


May 20-22, 2013

Two extraordinary air cargo decades ahead of us?

Source: Boeing

0

100

200

300

400

500

600

-30%

2031201920091999

Boeing 2012-2031 Forecasted Growth (5.2)1999-2011 10-Year Average Growth (3.2%)Boeing 2000-2019 Forecasted Growth (6.4%)

Billion FTKBoeing World Air Cargo Forecast 2000/2001

“…the long-term air cargo market will grow at an average rate of 6.4 percent over the next 20 years -- a tripling of the market.”

Boeing World Air Cargo Forecast 2010/2011“…World air cargo traffic will expand at an average annual rate of 5.9% for the next two decades, tripling the 2009 levels.”

Boeing World Air Cargo Forecast 2012/2013“…Over the next 20 years, world air cargo traffic will grow 5.2% per year. World air cargo traffic will more than double over the next 20 years… ”


May 20-22, 2013

Important Cargo Industry Issues – Past and Future

The “Unknown” ― Japan tsunami― Volcanic ash cloud― Thailand flood― Hurricane Katrina― Swine flu― SARS― etc.

Economic and Financial Issues― Consumer spending― Euro― Oil price― Exchange rates

Supply Chain and Logistical Issues― Modal shift― Inventories― Sourcing trends (“Nearshoring”)― IATA e-Cargo

Regulatory Issues― Security― Carbon pricing― Trade agreements and embargoes

Industry Economics― Consolidation (NW, CO, IB, KL, MP, …)― Capacity: wide body passenger aircraft to

replace freighter capacity?

Infrastructure Development― Panama Canal Expansion Project

The Americas


May 20-22, 2013

In the Americas, there are vast differences in the relationship of drivers of air cargo versus air cargo tonnage

Market Saturation in the North and Growth Potential in the South?

56.2%

19.2%

10.8%

North America5.1%

Asia

Middle East and Africa

Europe

Latin America8.7%

Population Share (2010)

GDP Share (2011)

Cargo Tonnage Share (2011)

Source: United Nations, Department of Economic and Social Affairs, Population Division (2011), World Population Prospects

7.2%

29.8%

5.9%25.0%

Rest

Asia

Middle East and AfricaEuropean Union

Latin America8.0%

North America

24.0%

Source: International Monetary Fund, World Economic Outlook (2013)

64.3%

Rest of World

5.4%

Latin America

30.3%

North America

Source: Airports Council International , 2011 World Airport Traffic Report

North America


May 20-22, 2013

North American air freight capacity growth has been contracting since March 2012, leading to above average load factors since September

North American Freight Load Factors (in %), 2012

Source: IATA

-7-6-5-4-3-2-1012345

DecNovOctSepAugJulJunMayAprMarFebJan

FTKATK32

33

34

35

36

37

38

Ø 38


North American Freight Tonne Kilometres (FTK) and Available Tonne Kilometres (ATK) Year over

Year Growth (in %), 2012

Source: IATA


May 20-22, 2013

Most of the top U.S. airports experienced a net decline in air cargo from 2001-2011

Top US Airports Cargo Tonnage Change (%) 2001-2011

-30.4-8.5

-3.1-9.6

-39.9-19.9

32.1-18.6

-11.8-9.8-9.1

-12.60.9

-9.8-5.2

12.449.649.0

35.748.8

Seattle (SEA)Washington DC (IAD)

Honolulu (HNL)Ontario (ONT)

San Francisco (SFO)Philadelphia (PHL)

Houston (IAH)Oakland (OAK)

Dallas/Fort Worth (DFW)Atlanta (ATL)

Newark (EWR)Indianapolis (IND)

Chicago (ORD)New York (JFK)

Los Angeles (LAX)Miami (MIA)

Cincinnati (CVG)Louisville (SDF)

Anchorage (ANC)Memphis (MEM)

Integrators and transit freight

Source: ACI Worldwide Airport Traffic Report 2002, ACI World Airport Traffic Report 2011.

Latin America


May 20-22, 2013

Population growth will remain a fundamental driver of air cargo

Despite declining Population Growth Rates, LAC will have the third largest Population in the World by 2050, spread across three Regions

750

702

652

590

443

Population (millions)

700

600

500

400

300

0.47%

1.44%

20502030202020101990

Source: United Nations, Department of Economic and Social Affairs, Population Division (2011). World Population Prospects.

ProjectedHistoric

369

345

3,831

941

590

738

4,612

2,068

751

719

585

447 NA…+29.7%

ME…+58.4%

EU -2.6%

LAC +27.3%

NF +119.8%

AS +20.4%

Source: Comision Economico para America Latina y el Caribe (CEPAL), Central Latinamericano y Caribeno de Demografico (CELACDE), www.ecLAC.cl., United Nations, Department of Economic and Social Affairs, World Population Prospects.

7%

67%

26%


May 20-22, 2013

LAC GDP is dominated by few countries, while LAC foreign trade is shifting in favor of Asia

403

8

11686

9

607

25

239

375

28

0

100

200

300

400

500

600

700 +50%

+338%

+106%

+208% +207%

North America

Middle East

EuropeAsiaAfrica

20112001

Source: International Trade Centre, Accessed September 2012.Source: International Monetary Fund, World Economic Outlook Database, April 2012.

7%3%

8%

21%

44%

OtherEcuador

1%Peru

Chile4%

Colombia6%

Venezuela 6%

Argentina

Mexico

Brazil

LAC GDP Shares (2011)

LAC Trade with World Regions (Billion USD, 2005 constant)


May 20-22, 2013

Latin American growth of air freight capacity supply and demand points into opposite directions, suppressing load factors

Latin American Freight Load Factors (in %), 2012

Source: IATA

-6-4-2024

68

10121416


FTKATK

32

33

34

35

36

37

38

39

40

41

42

JunMayAprMarFebJan

Ø 38

DecNovOctSepAugJul

Latin American Freight Tonne Kilometres (FTK) and Available Tonne Kilometres (ATK)

Year over Year Growth (in %), 2012

Source: IATA


May 20-22, 2013

The 10 Top Latin American Airports account for more than 60% of Latin American Air Cargo Tonnage

Top Latin American Airports Cargo Tonnage (Thousand Metric Tons) and Share of Total (%) in 2011

Manaus (MAO)

165

San Juan (SJU)

174

Quito (UIO)

187

Buenos Aires (EZE)

205

Campinas (VCP)

268

Lima (LIM)

287

Santiago (SCL)

288

Mexico City (MEX)*

415

Sao Paulo (GRU)

497

Bogota (BOG)

6171,892

40

35

30

25

20

15

10

5

0

2,000

1,900600

500

400

300

200

100

0Rest

Source: ACI Worldwide Airport Traffic Report 2002, 2003, ACI World Airport Traffic Report 2011.


May 20-22, 2013

The majority of top Latin American airports show double digit growth from 2001-2011

Air Cargo Tonnage Change (%) at the Top 10 Latin American Airport, 2001-2011

53.8

-20.7

51.8

27.4

34.3

150.8

-9.4

21.5

32.1

Manaus (MAO)

San Juan (SJU)

Quito (UIO)

Buenos Aires (EZE)

Campinas (VCP)

Lima (LIM)

Santiago (SCL)

Mexico City (MEX)*

Sao Paulo (GRU)

*Mexico: 2002-2011

Source: ACI Worldwide Airport Traffic Report 2002, 2003, ACI World Airport Traffic Report 2011.

n/a

No data for Bogota, Guayaquil.


May 20-22, 2013

Strong outlook for LAC air cargo growth, largest cluster on West Coast

Forecasted and current (2011) Cargo Tonnage (in Thousand Metric Tons)

*Note: Data excludes Guatemala.Source: ACI World Traffic Report.

1,000

500

0

3,000

2,500

2,000

1,500

5,000

4,500

4,000

3,500

Rest of LAC*

-1,044

Mexico

713

312

-1,720

Andean States

1,518

Brazil

262

823

324

Total LAC

4,995

PeruEcuadorColombiaChile

34%

2005 2010 2015 2020 2025 2030 2035

6,000

4,000

2,000

0

16,000

14,000

12,000

10,000

8,000

+5.7%

Boeing ForecastLeighFisher Forecast (Regression)

Source: LeighFisher estimate, November 2012, based on GDP forecasts by HSBC, World Bank World Development Indicators, International Financial Statistics of the IMF, IHS Global Insight, and Oxford Economic Forecasting, as well as estimated and projected values developed by the Economic Research Service, all converted to a 2005 base year.


May 20-22, 2013

Major Latin American Air Cargo Flows in 2031

Asia will dominate air cargo flows in 2031

Source: LeighFisher estimate, November 2012, based on GDP forecasts by HSBC, World Bank World Development Indicators, International Financial Statistics of the IMF, IHS Global Insight, and Oxford Economic Forecasting, as well as estimated and projected values developed by the Economic Research Service, all converted to a 2005 base year, and Boeing World Air Cargo Forecast 2012-13.

Conclusion


May 20-22, 2013

Planning ahead: Industry outlook and forecast

Worldwide ― We need to be careful with forecasts, and with “rules of thumb”. Cargo will likely

grow slower than in the past.

― Most assumptions are between 3%-5%, but with substantial regional differences.

North America― Air cargo has undergone a transformation over the past decade

― Growth rates remain low

Latin America Specific Challenges― Infrastructure

― Geographic Location

― Competition (Miami, other North American gateways)

www.leighfisher.com

Joy [email protected]+1.650.579.6404

Thanks for your attention — Q & A

Documents

Air Cargo Development in the Americas