Tuesday, November 29, 2011

Air Freight Down As Cargo Carriers Reduce Capacity

Load Factors Reduce Despite Market Contraction
Shipping News Feature

WORLDWIDE – The latest International Air Transport Association (IATA) report on air traffic shows a mixed picture for carriers with growth in passenger numbers but freight tonnage down quite sharply for the world’s cargo carriers as overall tonnage fell by 4.7% in October against last years figures. Despite a note of panic from some commentators at the news it is a hardly surprising development as air freight comes under pressure from cheaper alternatives at a time when austerity is the buzzword for manufacturers, particularly of high end goods. Tony Tyler, IATA’s Director General and CEO said:

“Cargo is the story of the month. Since mid-year the market has shrunk by almost 5% and this is far greater than the 1% fall in world trade. Air freight is among the first sectors to suffer when businesses confidence declines. While business confidence has declined considerably in recent months, industrial output has not. But in anticipation of weaker economic activity, there is a shift to cheaper and slower modes of transport.”

Some airlines have reduced their freighter fleets but the greater freight carrying capacity of larger wide bodied passenger aircraft which are coming into service has been to the detriment of cargo load factors which have dropped around 5% overall to 46.5%. The Asian – Pacific routes account for around 40% of global freight and here there has been an improvement, recording an increased freight load factor of 58.8% demonstrating the weakness elsewhere.

Overall for the year to date tonnages are down only 0.5% and despite the fact that around 46 million tonnes of cargo will be shipped by air in 2011 this is only a tiny fraction of the global freight transport market. As security, reliability and speed improves in other modes of transport there will always be sound financial reasons for air freight customers to seek out alternatives and with both domestic and international tonnages down over 4% for October domestic freight is particularly vulnerable to predation by high speed rail and express road haulage services.

The good news for the world’s carriers is that passenger growth remains strong with even the crisis stricken euro zone, which accounts for almost 30% of global air travel, showing a 6.4% growth in passenger levels last month, a factor that will balance out the recent poor showing for freight carriage.