MASkargo sees China revenue falling, China's hard asset binge

From the Business Times:

Malaysia Airlines Cargo Sdn Bhd (MASkargo), the air cargo unit of Malaysia Airlines (MAS), has warned that revenue from its operations here could fall 20 per cent this year on lower yields and capacity.

Shanghai is the second biggest contributor to MASkargo's overall revenue, after Kuala Lumpur, accounting for some 30 per cent contribution.

The Chinese station saw revenue drop 50 per cent in the first half compared with the same period last year.

It handled some 50,000 tonnes of cargo last year.
Parent MAS' capacity cuts on passenger flights in the first half of the year also affected MASkargo's bellyhold capacity.

MAS reduced its flights here to eight times a week from 14, while MASkargo trimmed its freighter service to 10 times a week from 13.

Song said that things were looking up now, based on China's trade figures which show signs of a recovery since September. This has enabled air cargo companies like MASkargo to gradually raise their freight rates again.

Quarter-on-quarter, Song expects MASkargo to post 35 per cent revenue growth in the fourth quarter.

The article had me fooled for a moment into thinking MAS will see china freight continue to decline, when in fact, it already has. Mostly, I see a recovery in growth q-o-q as pointed out by the last sentence. This is hardly newsworthy. If the Baltic Dry Index is any indicator, freight rates will not be as good going forward. China has been reported going on a massive commodity buying spree and while they mean good, it is way too early as this economic downturn has still a prolonged period to go.

It would not surprise me, next year, to see the same headline again as China retracts from its recent asset buying spree and realize that they have bought way too early in the economic cycle.