Solid start for cargo in 2018 says IATA, but cautions on Trump trade war

Trump trade war

Global cargo drivers remain “supportive” says the International Air Transport Association (IATA) whose data for global air freight markets showed freight tonne kilometre (FTK) demand rose 8.0 per cent in January 2018 compared to the year-earlier period. This was up from the 5.8 per cent annual growth recorded in December 2017.

Freight capacity, measured in available freight tonne kilometres (AFTKs), rose by 4.2 per cent year-on-year in January 2018.

The continued positive momentum in freight growth into 2018 reflects the fact that demand drivers for air cargo remain supportive, said IATA. Global demand for manufacturing exports is buoyant and meeting this strong demand is leading to longer supply chain delivery times, the association said. Demand for air cargo may strengthen as a result, with companies seeking faster delivery times to make up for longer production times.

“With 8.0 per cent growth in January, it’s been a solid start to 2018 for air cargo,” said Alexandre de Juniac, IATA’s director general and CEO. “That follows an exceptional year in which demand grew by 9.0 per cent. We expect demand for air cargo to taper to a more normal 4.5 per cent growth rate for 2018.

“But there are potential headwinds,” de Juniac cautioned. “If [US] President Trump follows through on his promise to impose sanctions on aluminium and steel imports, there is a very real risk of a trade war. Nobody wins when protectionist measures escalate,” he said.

The prospect of a global trade war with much of the world aligned against the US came about following US President Donald Trumps statements that under his direction the US will impose a a 25 per cent tariff on imported steel and 10 per cent on aluminium. This has invoked the ire of countries as diverse as Canada, China, Australia and the EU which has already drawn up a list of US products on which it would impose tariffs in retaliation.

This includes at the outset: Peanut butter, cranberries, orange juice, bourbon, Levi jeans and Harley Davidson motorbikes, amongst a raft of products on the provisional list being drawn up by EU members.

Meanwhile, all regions of the world reported an increase in air cargo demand in January 2018 with Asia-Pacific airlines seeing demand in freight volumes grow 7.7 per cent in January 2018 and capacity increase by 2.2 per cent, compared to the same period in 2017. The increase largely reflects the ongoing strong demand experienced by the region’s major exporters, China and Japan which has been driven in part by a pick-up in economic activity in Europe, IATA said. However, the upward-trend in seasonally-adjusted volumes has paused, it cautioned.

North American airlines’ freight volumes expanded 7.5 per cent in January 2018 year-on-year, as capacity increased 4.2 per cent. The strength of the US economy and the US dollar have improved the inbound freight market in recent years. However, this may be offset by the weakening in the dollar although the recently-agreed US tax reform bill may help to support freight volumes in the period ahead, according to IATA. Seasonally-adjusted volumes are broadly trending sideways, it added.

European airlines posted a 10.5 per cent increase in freight volumes in January 2018, while capacity increased 5.3 per cent. The strong European performance corresponds with a very healthy demand for new export orders among the region’s manufacturers. Seasonally-adjusted volumes jumped 3.0 per cent in month-on-month terms in January – the largest increase since March 2017.

Middle Eastern carriers’ freight volumes increased 4.4 per cent year-on-year in January 2018, the slowest growth of all regions, as capacity increased 6.3 per cent. Seasonally adjusted freight volumes continued to trend upwards during the first month of the year, however, the region’s carriers remain affected by the ongoing challenging political environment in the Middle East.

Latin American airlines experienced a growth in demand of 8.0 per cent in January, with capacity increasing 5.4 per cent. The pick-up in demand comes alongside signs of economic recovery in the region’s largest economy, Brazil. Seasonally-adjusted international freight volumes are now back to the levels seen at the end of 2014.

African carriers’ saw freight demand increase by 12.9 per cent in January 2018 compared to the same month last year. The increase, IATA said, was helped by very strong growth on the trade lanes to and from Asia. Freight demand jumped by 59 per cent between Africa and Asia in 2017 following an increase in the number of direct flights between the continents, driven by ongoing foreign investment flows into Africa.

Solid start for air cargo in 2018 says IATA
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Solid start for air cargo in 2018 says IATA
Global cargo drivers remain "supportive" says the International Air Transport Association (IATA) whose data for global air freight markets showed freight tonne kilometer (FTK) demand rose 8.0 per cent in January 2018 compared to the year-earlier period.
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