Wednesday, May 8, 2019

Latest Air Cargo Figures Show Freight Somewhat in the Doldrums  

Capacity Outstrips Demand Yet Again

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Shipping News Feature WORLDWIDE – Having published an analysis of ocean container freight trends yesterday we come to the way air cargo has performed in March 2019 with the statistics released as usual by IATA this week. Despite an overall growth of just 0.1% in the month compared to 2018, and therefore a significant improvement on the 4.9% contraction in February, in seasonally adjusted terms, demand is still down 1.5% over the past year.

Freight capacity, measured in available freight tonne kilometres (AFTKs), rose by 3.1% year-on-year in March 2019. Capacity growth has now outstripped demand growth for 11 out of the last 12 months, a factor that clearly concerns IATA which says demand for air cargo continues to face ‘significant headwinds’.

IATA cites a 1% fall in global trade volumes in the past year coupled with a weakening of consumer confidence and worldwide economic activity. The Global Purchasing Managers Index (PMI) has also indicated falling global export orders since September 2018. Industry confidence regarding the outlook, however remains relatively upbeat with only 13% of respondents from IATA’s Business Confidence Survey expecting to see a decrease in freight volumes in 2019 compared to 2018. Alexandre de Juniac, IATA's Director General and CEO, observed:

“Year-on-year demand for air freight edged back into positive territory in March with 0.1% growth. After four consecutive months of contraction, this is an encouraging development. But the headwinds from weakening global trade, growing trade tensions and shrinking order books have not gone away.”

As to the regional trends, the Asia-Pacific airlines saw demand for air freight shrink by 3.4% in March 2019, compared to the same period in 2018. This was a significant improvement from the 12.0% decline in growth from the previous month. Weaker manufacturing conditions for exporters in the region, ongoing trade tensions and a slowing of the Chinese economy impacted the market. Capacity decreased by 1.0%.

Meanwhile North American airlines saw demand increase by 0.4% in March 2019, compared to the same period a year earlier. The recent easing of growth is partly due to a slowing of US domestic economic activity in the later part of 2018 and falling global trade volumes. Despite this, new export orders are rising which would support air cargo growth. Capacity increased by 2.6% over the past year.

European airlines posted a 3.6% increase in freight demand in March 2019 compared to the same period a year earlier. Given the weaker manufacturing conditions for exporters in Germany, and uncertainty over Brexit, March’s performance represents a positive outcome. Capacity increased by 6.4% year-on-year.

Middle Eastern airlines’ freight volumes increased 1.3% in March 2019 compared to the year-ago period. Capacity increased by 3.8%. A clear downward trend in seasonally-adjusted international air cargo demand is now evident with weakening air freight volumes to/from North America and to/from Asia Pacific contributing to the softer performance.

In Latin America, airlines experienced an increase in freight demand growth in March 2019 of 3.6% compared to the same period last year and capacity increased by 16.9%. The emergence of the Brazilian economy from recession is supporting a resurgence in air cargo demand. Nevertheless, ongoing economic and political uncertainties in various parts of the region continue to present challenges for the industry.

The big winners were the African carriers which posted the fastest growth of any region in March 2019, with an increase in demand of 6.0% compared to the same period a year earlier. Seasonally-adjusted international freight volumes are lower than their peak in mid-2017; despite this, they are still around 30% higher than their most recent trough in late-2015. Capacity grew 15.2% year-on-year.

The full report from IATA on the figures for March can be viewed here.

Photo: Image courtesy of Volga Dnepr

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