Latest numbers from IATA highlight continued decline in air freight market

Judging by the movement on the oil or stock markets, sentiment as regards the world’s economy is one of concern for the prospects for growth. If the IATA’s latest statistics on air freight are to be believed, this is more than justified.

Admittedly, the IATA numbers are tricky to read. Indeed, it appears that the air freight market has become slightly detached from the rest of the economy. According to the statistics published on Monday, the market for air freight in North America contracted by 3.2% on a year-on-year basis, which IATA described as “hard to read…but export indicators are poor making it hard to be optimistic for the coming months”. Similarly, Europe saw freight demand drop by 2% in November, whilst Asia-Pacific saw a fall of 1.5% year-on-year, although this represented a 1.9% rise over October which IATA ascribed to a rise in exports out of Japan.

Such a dismal picture is somewhat at odds with the moderate growth that the World Bank describes in its latest report. For example, the World Bank believes that in emerging market regions such as Asia-Pacific economic demand grew at 6.5% in 2015 whilst Europe and Central Asia saw a 2.1% expansion.

Unsurprisingly the falls in freight traffic recorded by IATA led to a fall in ‘freight load factors’ (utilisation of freight capacity in aircraft), something which has been heighted by the contrasting buoyancy in the market for air passenger services and resulting need for more aircraft.

What the numbers do imply is a continued fall in demand for air freight services. Why this should persist to be the case is unclear but the numbers appear hard to refute, even if the macro-economic estimates of global growth are optimistic. It might be the case that export demand is very depressed, far more depressed than official estimates described, although it would still be remarkable if exports out of both the developed world and economies such as China and South East Asia were falling so steeply.

Tony Tyler, the Director General of IATA, described the market as “bottoming-out…but there is a great deal of uncertainty” pointing to some month-on-month recovery as grounds for optimism. However, these will need to be sustained if this optimism is to be fulfilled.