Wednesday, August 5, 2015

IATA Air Freight Figures Show Cargo Market Generally Lagging Back

Some Bright Spots but Trade Overall Slower Than it Has Been
Shipping News Feature

WORLDWIDE – The International Air Transport Association (IATA) has released its global air freight market data for year to date and for the month of June, confirming that growth in air cargo volumes has slowed down, consistent with declines in trade activity, mostly in emerging markets. The decline in world trade reflects a combination of weaker than expected global economic growth, in emerging markets and the US, as well as shifts toward the domestic market in China.

Air freight volumes measured in freight tonne kilometres (FTK) rose just 1.2% in June, compared to a year ago. Growth for the first 6 months of 2015 slowed to 3.5%. World trade is still only growing in line with domestic production, but air freight’s share of world trade has been increasing since mid-2014. At the moment the industry is sticking with the view that economic growth and trade will accelerate in the second half of the year, strengthening growth in air cargo volumes. Current demand conditions, however, are gloomy. June data show no increase in business confidence compared to the start of the year, and growth in export orders remains weak.

Regional performance varied widely for the month of June with Asia-Pacific, North American and Latin American carriers reporting year-on-year declines (-0.3%, -3.3%, and -1.6% respectively) while European carriers reported that markets were flat. This was offset by the strong performance of Middle Eastern (+15.3%) and African (+6.7%) carriers to keep growth in positive territory.

The general trend of a weaker 2015 compared to 2014 can be seen in the half-year data. Air freight markets expanded by 5.8% in 2014; however year-to-date growth for 2015 stands at 3.5%. Tony Tyler, IATA’s Director General and CEO, said:

“The half-year report for air cargo is not encouraging. With growth of just 1.2% over June last year, markets are basically stagnating. Some carriers are doing better than others at picking up the business that is out there. But overall it has been a disappointing first half of 2015, especially considering the strong finish to 2014. The remainder of the year holds mixed signals. The general expectation is for an acceleration of economic growth, but business confidence and export orders look weak. Air cargo and the global economy will all benefit if governments can successfully focus on stabilising growth and stimulating trade by removing barriers.”

Regionally, Asia-Pacific carriers saw a fall in FTKs of 0.3% in June compared to June 2014, and capacity expanded 4%. The region has experienced a notable slowdown in imports and exports over recent months, and latest data shows emerging Asia trade activity down 8%. Growth for the year-to-date was 5.4%. In addition to generally weak trade growth, the region is the most exposed to Chinese influence where government policy is currently more focused on stimulating domestic markets.

European carriers reported flat demand in June (0.0%), compared to a year ago and capacity rose 2.2%. Improvements in Eurozone business confidence have not led to increased air freight demand, and consumer confidence has been hit by the Greek crisis. Growth for the year-to-date was -0.6%.

North American airlines experienced a decline of 3.3% year-on-year and capacity grew 2.8%. The positive impact of a modal shift to air as a result of the West Coast ports strike has faded and economic performance, despite some improvement in the second quarter, is subdued. Growth for the first six months of the year was -0.4%.

Middle Eastern carriers saw the strongest growth in June, with demand expanding by 15.3%, and capacity rose 19.2%. Airlines in the region have pursued a successful hub strategy connecting both long- and short-haul markets. Although some major economies in the region have seen slowdowns in non-oil sectors, economic growth remains generally robust, which is also helping to sustain demand for air freight. Growth for the year-to-date is running at 14%.

Latin American airlines reported a fall in demand of 1.6% year-on-year, and capacity expanded 3.7%. Regional trade activity has grown in the first half of 2015, despite continuing weakness in Brazil and Argentina although unfortunately this has not translated into stronger demand for air freight. Growth for the year-to-date was -6.9%.

African carriers experienced growth in demand of 6.7%, and capacity rose by the same amount. The Nigerian and South African economies have underperformed for much of the year so far, however regional trade has held up. Demand growth for the first six months was 4.8%.