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Air Cargo Markets in Modest Slowdown

Home Search Send to Friend Latest Travel News Asia Wednesday, 28 May 2014
 

Data compiled by IATA shows that demand (measured in Freight Tonne Kilometers or FTKs) for global air freight markets in April 2014 was 3.2% above previous year levels.

 Demand has not, however, grown in recent months. Traffic levels in April were slightly below those of January and 1.1% lower than what was recorded in March.

The latest data shows that prior improvements in the demand environment are experiencing some reversal. Largely as a result of further slowdown in the emerging markets, mostly China, indicators of business confidence slipped further in April.

Levels still point toward growth, but at the weakest pace for the past five months. World trade growth has also slowed over recent months. However, momentum in advanced economies remains intact, and export orders still point to expansion. This suggests that current sluggishness in the demand drivers is likely temporary.

“Trading conditions for air freight are difficult. Overall, business activity and trade have shifted down a gear after a strong end to 2013. And this is taking its toll on growth in the air cargo sector. Developed economies are still maintaining post-recession momentum and the expectation is for a stronger finish to the year,” said Tony Tyler, IATA’s Director General and CEO.

The air cargo sector is committed to improving its attractiveness to shippers through efficiency. The goal is to reduce shipping times by 48 hours before 2020. A centerpiece of this effort is the e-freight initiative which seeks to modernize the air cargo sector with paperless business processes.

 “Air cargo’s sales proposition is speed, and cumbersome processes are holding us back. In March we reached a significant milestone. For the first time, the e-Air Waybill (e-AWB) was used for over 200,000 shipments. That’s good news but we still have a long way to go,” said Tyler.

Regional Analysis

 Asia Pacific carriers saw cargo demand grow by 5.2% year-on-year. The strength of this performance is exaggerated by a comparison to a particularly weak April 2013. Ongoing weakness in Chinese manufacturing activity is likely to impact on air freight demand in coming months, and export volumes in emerging Asian markets have been in continuous decline throughout 2014. Capacity rose 7.8%.

 European airlines saw demand for air cargo fall by 0.7% compared to April 2013, as trade activity leveled off. GDP growth in the Eurozone was just 0.2% in the first quarter. However, indicators look positive for a stronger second quarter. Capacity was up just 0.2%.

 North American carriers posted year-on-year growth in demand of 2.6%. The latest data show a rebound in trade volumes to and from the US and underlying growth trends in business activity are positive. This could boost air freight growth in future months. Capacity was down 0.8%.

 Middle Eastern carriers reported that air cargo demand expanded 8.7% compared to the previous April. This is slightly slower growth compared to previous months, but still easily the strongest growth of any region. Carriers are benefitting from the upswing in developed economies, and increased volumes from emerging markets in Asia and Africa. Capacity was up 8.1%.

 Latin American airlines suffered a fall in cargo demand of 6.5% compared to April 2013. Trade volumes in the region have slowed in recent months, reflecting a wider ongoing emerging market malaise. Capacity also fell, but by only 0.5%.

 African airlines saw air cargo demand grow by 2.9%. Further growth was held back by weakness in key economies in the region, such as South Africa. Capacity rose by only 1.1%.

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