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NYK - the argument now is over what a normal year looks like

NYK has raised its dividend to ¥330 a share on a year swollen by the closure of the Strait of Hormuz and strong container rates, but its own guidance has second-half profit falling by more than 40%. Morgan Stanley values the company on a normal year worth less than half of this one and sees a risk the dividend is cut in the year to March 2028; JP Morgan's valuation sits close to the share price, and NYK's own ...

Air cargo demand continues to grow but peak surge looking unlikely

Air cargo demand growth remained strong, but the chance of there being a further end-of-year surge seems to be fading, according to data provider Xeneta. The data firm's latest figures show that in October air cargo demand increased by 6% year on year while capacity was flat. As a result of demand growing faster than supply, the cargo load factor increased by two percentage points to 63%. Meanwhile, average spot rates were up 29% compared with last year at $3.11 per kg as carriers failed to add capacity to the growing market and fuel prices drove up the cost of air cargo operations. While demand is on a run of seven months of consecutive growth, Xeneta says it doesn't seem like there will be a further surge in volumes during the air cargo Christmas peak season. "Market conditions showed few signs of a sudden increase in capacity pressure, a surge in rates above the levels already seen across the year, or freight charter prices 'hitting the roof' that would signal a late peak in volumes," said Xeneta's chief airfreight officer, Niall van de Wouw. The transpacific has been this year's growth leader as AI-related shipments continue to fill aircraft. Xeneta figures show that Asia Pacific to North America volumes were up 15% in October. The demand growth fed through to freight rate increases. Southeast Asia to North America spot rates rose 3% month on month to $6.34 per kg, while Northeast Asia to North America prices were up 4% to $6.21 per kg. However, Xeneta said that the largest rate increase was on the transatlantic westbound corridor, where Europe to North America spot rates rose 10% to $2.31 per kg as airlines "shifted to their winter schedules". "Tighter capacity on this corridor is consequently pushing up airline rates being quoted to forwarders in recent tenders," Xeneta said. Rates from Northeast Asia to Europe increased 4% month on month in October to $4.97 per kg and Southeast Asia to Europe was up 3% to $4.35 per kg. However, Xeneta warned that Asia to Europe e-commerce volumes were 61% down year on year in the third quarter as a result of the European Union's €3 charge for packages that was added on 1 July. Meanwhile, exports from China to Europe fell by 29%, which was in part down to a tripling of exports to Russia, Xeneta said. "Freighter capacity has also moved," the data provider explained. "Direct freighter capacity between Asia and Europe fell again in October, on top of the capacity lost on routings via the Middle East." Outlook Looking ahead, Xeneta warned that some Asia-Europe air cargo volumes would shift back to ocean as shipping line transits through the Suez Canal continue to recover. "Scheduled container shipping capacity crossing the Red Sea reached around half of its pre-crisis level in October, according to Xeneta ocean data," Xeneta said. "Just over half of Asia-Europe capacity is now routed via the Suez Canal in at least one direction, with around a third sailing through both ways. "Air's share of European Import (EU) import tonnage from Asia rose from 1.1% in 2023 to 1.7% in 2024, at the height of the Red Sea crisis, as ocean freight schedule reliability from the Far East to North Europe fell from 28% to 9.3%. "When reliability recovered to 20% in 2025, air's share fell back to 1.2%. In the first eight months of 2026, it edged up to 1.3%, after the closure of the Strait of Hormuz in February led carriers to shelve their planned return to the Suez Canal." Xeneta expects cargo that moved to air for reliability rather than speed to start returning to ocean once schedule reliability shows a sustained recovery, most likely from the second quarter of 2027. "Until then, air will likely keep the cargo it has," it added. Next year, Xeneta's baseline is for airfreight rates to decline overall. "In the past couple of years, it has not been the level of demand that caused the uptick in rates; it has been the availability of capacity, says van de Wouw. "If the Middle East situation recovers, there will be a rebalancing of demand and supply, and rates will then become lower. But things will happen. We don't know what or where, but this is the lesson the market has learned. "We can't call these 'Black Swan' events anymore because they are too frequent. This makes contract negotiations challenging for everyone."

Lufthansa Cargo sees operating profit soar in Q3

Lufthansa Cargo has seen its operating profits increase by more than 200% as the company has benefited from semiconductor demand and new services to India. Lufthansa's logistics division, which includes Lufthansa Cargo, time:matters, Jettainer, HeyWorld and a 50% stake in AeroLogic, saw revenues for the third quarter of the year increase by 26% to €1bn while earnings before interest and tax jumped by 230% to €162m. Volumes were up 11% to 2,546m revenue cargo tonne km (RCTK), while capacity increased by 5% to 4,010m available RCTK and the load factor was up three percentage points to 63.5%. In a results presentation, the logistics business said that performance had been boosted by broad-based regional growth and that additional India flights had supported volume and yields. The company highlighted that temperature-controlled freight revenues were up 33% against the previous year driven by strong pharma and semiconductor growth. The company added that continued cost discipline enhanced profitability alongside strong volume and yield growth and pointed out that the third quarter of the year tends to be one of its weakest in terms of financial performance. The carrier's freighter business had also been able to benefit from the reduction of bellyhold capacity in the Middle East caused by the ongoing conflict in the region. "In the context of the significantly changed market environment due to the conflict in the Middle East and the corresponding reduction in competitors' capacities in the region, Lufthansa Cargo's freight business gained momentum in overall terms," the company said. "The reduction in the volume of capacity on the market and the strong rise in fuel costs led to a significant increase in yields compared to previous quarters." Demand was driven by continued strong business in the Asia/Pacific region in particular, as well as in the Americas, the company added. However, third-quarter costs were also on the rise - up 16% year on year to €924m - due to higher fuel and charter costs. Earlier this week, Lufthansa Cargo completed its acquisition of Germany-based handler LUG aircargo handling to strengthen its infrastructure for future growth.