Thursday, October 1, 2015

Cargo Report Shows Globally Air Freight Figures Stabilised in August

Slightly Smarter Data from IATA
Shipping News Feature

WORLDWIDE – The International Air Transport Association (IATA) released data for global air freight markets showing that in August freight markets stabilised after two months of decline. Measured in Freight Tonne Kilometres (FTK’s), air cargo volumes rose 0.2% compared to the same month a year ago, consistent with developments in world trade activity. This is a modest improvement on July performance when freight demand contracted by 0.6% year-over-year. Speaking on the current state of the air cargo market, IATA’s Director General and CEO Tony Tyler, said:

“After declines in June and July, signs of a stabilisation in air cargo are welcome. But all is not well. Total volumes are down 2% compared to the end of 2014. And some of the key reasons for the earlier weakness – for example, downgraded growth expectations in emerging Asia, and the rebalancing of the Chinese economy toward domestic consumption – are still there. Even though world trade volumes have slightly picked up, the industry will have to work hard to match the strong finish to 2014.”

Airlines in Asia Pacific continue to experience weakness, but declines in volumes eased up a bit as trade to and from emerging Asia stopped shrinking. A slight improvement for European carriers also helped contain further declines in the industry with airlines in the region seeing a small 0.7% rise on a year ago. Recent improvements in Eurozone manufacturing business activity could finally be starting to support air freight demand.

The results varied widely by region with carriers in the Middle East once again reporting the most significant growth at 10.4%, which globally helped offset some of the decline that North American carriers experienced, down 3.3% in August year-on-year. As expected airlines in North America continue to see significant falls in FTK volumes since the boost from modal shift due to sea port congestion earlier in the year.

In the recent past, declines in trade have resulted from weaker than expected global economic growth as well as focal shifts in some economies. Global economic growth has softened due to slower growth in China as well as emerging markets in South America, including Brazil and Argentina. The sluggish demand backdrop has been compounded by China’s shift in focus toward its domestic market as well as the US’s support of its own manufacturing sector.

Asia-Pacific carriers saw a fall in FTKs of 1% in August compared to August 2014, and capacity expanded 4.9%. The contraction was less severe than in July at -2%, although with the continued drop in export orders for Chinese manufacturing, it is hard to say if the decline has bottomed out.

European carriers reported a rise in demand in August of 0.7% compared to a year ago and capacity rose 3.9%. Recent improvements in manufacturing business activity seem to be finally feeding through to support air freight demand.

North American airlines experienced a decline of 3.3% year-on-year and capacity grew 4.4%. Airlines in the region experienced a significant fall in FTK volumes since the end of congestion at West Coast ports. Shippers had relied heavily on air cargo to avoid delays from US container port congestion from November through March, but now, with no congestion at West Coast sea ports, demand for air freight transport has been easing off. More fundamentally, although better economic performance is expected in the second half of the year, any improvement in economic performance does not appear to be driving stronger air freight demand.

As stated Middle Eastern carriers saw the strongest growth with demand expanding by 10.4%, and capacity rising 14.3%. Although some economies in the region, including Saudi Arabia and the UAE have suffered a slowdown in non-oil stimulated growth, overall expansion remains robust enough to sustain solid growth in air freight.

Latin American airlines reported a big fall in demand of 7.3% year-on-year, with capacity expanding by 0.8%. The large fall reflects the continued economic struggles of Brazil and Argentina, while regional trade activity has not created stronger air freight demand.

African carriers experienced growth in demand of 2.3%, and capacity rose by 10.6%. Nigeria and South Africa, the largest economies in the region, underperformed. Regional trade, however, has held up, and generated increases in air freight volumes.

Photo: Courtesy of Cargolux.