Thursday, August 7, 2014

Half Year Global Air Freight Figures from IATA Show Growth in Tonnages

Improving Trade Figures Boost Statistics with Only Latin America in Decline
Shipping News Feature

WORLDWIDE – The International Air Transport Association (IATA) has released data for the global air freight industry showing overall growth for the first half of 2014. According to IATA, current freight tonne kilometre (FTK) levels are the highest they have been since mid-2010, outside of the volumes recorded in January 2014. This means that demand conditions throughout 2014 have been strong enough to support these improved FTK levels, but there has been no sustained acceleration in growth over recent months.

The overall growth for the first six months of 2014 stands at 4.1% compared to the same period in 2013. That is much stronger than the weak 1.4% increase reported for the full-year 2013 over 2012 levels. IATA says that the strengthened growth has been underpinned by improving global trade and stronger business activity over the past year. IATA also released its findings for June which showed a slightly slower pace of increase, rising 2.3% year-on-year, as compared to 4.9% in May.

Regionally, the most notable improvement in air freight demand over recent months has been for the Asia Pacific region with growth in June at 4.9% compared to a year ago. For the first six months of the year, FTKs carried by Asia Pacific airlines were up 4.6% compared to the same period in 2013. Capacity in the Asia Pacific region for the month expanded 4.3%. Although much of the improvement year-to-date is a result of an increase in volumes which took place at the end of 2013, the past months have shown some acceleration in the growth trend once again, after virtually no change in volumes in the early part of 2014. Data from May shows that regional trade volumes remain at improved levels, after continued decline throughout Q1.

Moreover, although export orders for China remain volatile, there was a strong increase in July, suggesting the upturn in regional trade growth could be sustained in the months ahead. In addition, manufacturing activity is expanding again for the first time since December 2013.

Contrastingly, European carriers saw freight volumes fall 1.5% compared to June 2013, possibly reflecting recent weakness in manufacturing and export activity. Overall, for the year-to-date, European cargo is up 3.2%, a stronger performance than in 2013. Capacity in June rose 2.1%.

North American airlines’ freight volumes declined 0.1%, compared to June 2013, and for the year-to-date are up just 1.6%. The overall performance may reflect the weakness in trade volumes that followed the severe weather events in the first quarter. Recent data points to much stronger business activity which could support stronger air cargo volumes in the months ahead. Capacity for the month fell 1%.

Middle East carriers continue to expand strongly. Air cargo growth was 7% in June and is up 10% for the year-to-date. Airlines in the region are capitalising on growth opportunities by expanding services to fast-growing emerging markets, such as Uganda and Mexico. Capacity expanded 8.6% year-on-year.

African carriers grew 4.8% in June, much stronger than the year-to-date average of 3.1%. Growth has been affected by a slowdown in some African economies, notably South Africa. Improving trade data, however, points to a more optimistic outlook for the rest of the year. Capacity grew 0.3% in June, year-on-year.

Latin American airlines didn’t fare as well as its counterparts in other emerging markets, suffering a sharp contraction of 3.4% in June. The overall performance for the year-to-date has also been a disappointing -0.1%, the only region to be in decline this year. Sluggish trade growth and in particular the weakness of the Brazilian economy is dragging down growth, even though the country hosted the World Cup that month. Capacity in June was up by 1.6%.

IATA reckons the outlook for air freight markets is broadly positive after some signs of wavering in prior months. The measure of global business activity increased in June, suggesting demand conditions could be picking-up after a slowdown in Q1. World trade volumes declined throughout the first three months of the year, but latest data shows some improvement in volumes in Q2. New exports orders have been notably volatile over recent months, but levels continue to indicate growth in world trade, which bodes well for air freight demand. Tony Tyler, IATA’s Director General and CEO, said:

“At the half-way point of the year, it is clear that overall cargo demand is much stronger than in 2013. Carriers in Asia-Pacific and the Middle East have been the biggest beneficiaries of the improved market conditions. Europe is doing reasonably well, albeit still in recovery mode, the weak spot is the America's.

“The general improvement in the economic environment is always good news for air cargo. This may not however, be a recovery as usual. First there are a lot of risks out there—from conflicts and sanctions to potential national defaults and fear of the Ebola outbreak. Second, while air cargo is slowly emerging from two years in the doldrums time has not stood still. Logistics has become an even more intensely competitive sector. Shippers value faster end-to-end transit times, greater reliability and improved efficiency. More clearly than ever, the building blocks for the future of air cargo are found in global programs such as e-Freight and Cargo 2000. These are helping the entire value chain to deliver on the expectations of their customers.”