According to DHL, global forwarding air freight market outlook remained low at minus 20 per cent y-o-y in February 2023. — AFP photo
KUCHING (March 13): China’s reopening remains a key catalyst for Malaysia’s transportation sector, encompassing demand for air freight and ocean freight.
The team with RHB Investment Bank Bhd (RHB Research) expect China’s reopening to act as a re-rating catalyst for both Malaysia Airports Holdings Bhd (MAHB) and Westports Holdings Bhd (Westports) in terms of increased passenger traffic and container throughput growth.
This comes as according to DHL, global forwarding air freight market outlook remained low at minus 20 per cent year on year (y-o-y) (in demand volume) in February 2023.
This was likely attributable to a high inflation rate, ocean overcapacity, and high inventories levels.
“Moving forward, there is no expectation for a surge in demand for air freight, as indicated by a comparatively lower Purchasing Managing Index, at least not until inflation slows down,” RHB Research said in a sector analysis.
“Coupled with a lower demand, capacity recovery for air freight should continue on the back of improvements in belly capacity, as both business and passenger leisure travel begin to recover.
“While air freight rate has come off from its peak in mid-2022, the market remains competitive due to higher-than-normal jet fuel prices as demand for travel has picked up.”
Meanwhile, RHB Research saw that demand for ocean freight is flattening out as well, with signs for a potential recovery on some trade lanes and easing of congested ports.
“Nevertheless, a shift in policy focus from zero Covid-19 to economic stimulus has advanced mainland China’s growth, which should, in turn, lift trade flows within the Asia-Pacific region,” it highlighted.
“Freight rates continue to slide, but at a much slower pace, and have returned to pre-pandemic levels as capacities across ports are freed up.”