Air cargo growth shrinks to slowest quarterly growth in two years: IATA

IATA

Air freight growth slowed to its slowest pace in more than two years according to the latest IATA statistics which showed demand in freight tonne kilometres (FTKs) slowed to 2.8 per cent in the three months ended July.

While FTKs are continuing to increase in seasonally adjusted (SA) terms, the upward trend has slowed markedly from that seen during the best of the upturn in air freight last year, the International Air Transport Association (IATA) said today. The significance here is that the upward FTK trend has moderated markedly over the past year or so and recently fell into on the Europe-Asia market for the first time since mid-2016, IATA added.

“This largely reflects the fact that the inventory restocking cycle, which helped air freight growth to outperform that of wider global trade in 2016/17, has now run its course. More generally, against a backdrop of rising trade protectionism measures, wider momentum in world trade also looks to be weakening,” it said.

Cargo yields have continued to trend upwards in H2 2018, albeit at a slower pace than a year ago as less favourable supply and demand dynamics impact the market. Nonetheless, cargo yields including fuel and other surcharges were still 14.9 per cent higher in year-on-year terms in July.

While the industry-wide load factor is trending down, ongoing high rates of freighter aircraft utilisation will continue to help to reduce average costs, and to help offset ongoing upward pressure on costs, particularly from higher fuel prices, IATA added.

IATA also noted that global business confidence has weakened over the summer months, driven in part by concerns about the impact of trade tariffs on activity, but also reflect country-specific developments (notably for Turkey).

While measures of consumer confidence remain close to multi-year high levels, the latest monthly outcomes have continued to suggest that the strong upturn seen in consumer confidence has peaked, observed IATA economists.

IATA
The pick-up in air freight demand in recent years has coincided with a stronger global economic and trade backdrop. Recent gains in world trade however, have been concentrated mainly in emerging economies.

Indeed, the new export orders component of the global manufacturing Purchasing Managers’ Index (PMI) recently fell to a 25-month low. While the series is still consistent with rising orders, it is pointing to annual FTK growth of below 1.0 per cent in Q4 2018, IATA said.

“The weakening in new export orders has been seen across most major trading nations. Moreover, there are signs that the acute bottlenecks in supply chains, which typically benefit demand for air freight , have also started to ease,” IATA said.

And on the crucial capacity issue, annual growth in industry-wide available freight tonne kilometres (AFTKs) in 2018, so far, has been two percentage points faster than in the same period of 2017.

Airlines based in Asia Pacific have added capacity at the fastest rate, resulting in declining load-factors after peaking in mid-2017. However, daily utilisation of large widebody freighters has stayed at levels last seen in 2012, at around 11 hours per day, IATA added.

Jet fuel prices, always a key concern, were higher in 2018 so far, continuing their upward trend of recent years, around 40 per cent higher than a year ago.

Summary
Air cargo growth shrinks to slowest quarterly growth in two years: IATA
Article Name
Air cargo growth shrinks to slowest quarterly growth in two years: IATA
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Air freight growth slowed to its slowest pace in more than two years according to the latest IATA statistics which showed demand in freight tonne kilometres (FTKs) slowed to 2.8 per cent in the three months ended July.
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AsiaCargoBuzz.com
AsiaCargoBuzz.com
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