Air freight is growing but IATA is pessimistic

The IATA has reported strong cargo demand continuing in July, as it released data for global air cargo markets.

Despite IATA’s caution, the newest figures that it has just published show that the air freight market is not depressed. Rather growth over the past 12 months rose by 3.9% as measured in Freight Tonne Kilometres (FTK).

Demand in certain parts of the world is surprisingly strong. Europe saw a 6.6% increase in FTKs for both international and national traffic in August, leading to a 4.7% increase for the year so far. The implication for rates is significant as capacity, as measured in Available Freight Tonne Kilometres (AFTK), in Europe over the past year increased by 4.7%, increasing the load factor by 0.8%.

There are also other routes that appear to be doing well, with the “main freight lanes out of Asia” increasing by 6.5% year-on-year, whilst the Europe-Asia route also appears to be growing by 2.9% year-on-year. Trans-Pacific traffic is recovering, but more tentatively. IATA suggested that this growth is driven by a recovery in export activity between major markets, citing an uptick in German exporters PMI’s.

A contrasting market was that of the Middle East, once growing ferociously but now just seeing a year-on-year expansion of 1.8%. IATA attributed this to slower growth in traffic between the Middle East and Asia, suggesting that the local carriers have lost market share to European airlines flying into the region. They point out that airports in the Gulf have seen falling cargo throughput in recent months.

The US appears strong, with FTK’s up 5.5%. However, this is deceptive, the numbers being flattered by the low demand in the same period last year with underlying indicators suggesting flat demand. Exports in particular look to be hit by the strong dollar.

Despite all of the good headline numbers, IATA is pessimistic for the longer-term. It seems to think that the present level of growth is transitory, with the underlying problem being the miserable condition of world trade. Citing numbers that implied a shrinking of world trade mid-year, IATA commented, “any boost in the near term is likely to prove transitory; the bigger picture is that the ongoing sluggishness of global trade conditions continues to present a stiff headwind for air freight.”

If this brief has been of interest, you might like to know more about the Ti Dashboard. The Ti Dashboard is a collection of global and regional transportation, trade and economic data, providing the facts you need to make informed decisions. Contact Michael Clover for more information.

Source: Transport Intelligence, October 6, 2016

Author: Thomas Cullen

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