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Dubai, UAE, October 01, 2018:   The International Air Transport Association (IATA) released data for global air freight markets showing that demand, measured in freight tonne kilometers (FTKs), rose 2.3% in August 2018, compared to the same period the year before. This pace of growth was unchanged from the previous month but was less than half the five-year average growth rate of 5.1%. 
 
Freight capacity, measured in available freight tonne kilometers (AFTKs), grew by 4.5% year-on-year in August 2018. This was the sixth month in a row that capacity growth outstripped demand growth. Yields, however, appear to be holding up. 
 
Growth is being supported by a number of factors, including buoyant consumer confidence, an upturn in the global investment cycle and growing international e-commerce. However, demand is being negatively impacted by three factors:
  • A broad-based weakening in manufacturing firms' export order books. Specifically, export order books in Europe, China, Japan and Korea have fallen in recent months.
  • Longer supplier delivery times are being reported by manufacturers in Asia and Europe, the top two global trading areas by volume. This typically means that they have less need for the speed afforded by air freight.
  • Risks to global trade from the recent escalation in trade tensions. 
“August demand for air cargo grew at 2.3%, unchanged from the previous month. Buoyant consumer confidence, the growth of international e-commerce and the broad-based global economic upturn are behind the growth. But there are downside risks. Order books are weakening and supply delivery times are lengthening. And the growing trade tensions are a specter over the industry. The early focus of tariffs was not on products typically carried by air. But as the list of tariffs grows so does the air cargo industry's vulnerability. And, we can expect souring trading relations to eventually impact business travel. There are no winners in trade wars,” said Alexandre de Juniac, IATA's Director General and CEO.   
 
Regional Performance
 
All regions reported year-on-year demand growth in August 2018, except Africa which contracted. All regions reported that capacity growth exceeded growth in demand. 
 
Asia-Pacific airlines saw demand for air freight grow by 1.6% in August 2018 compared to the same period last year. This was an increase over the previous month but a marked slowdown in growth from the past year. Weaker manufacturing conditions for exporters, particularly in Japan and China, have impacted the demand. As the largest freight-flying region, carrying more than one-third of the total, the risks from protectionist measures are disproportionately high. Capacity increased by 3.4%.
 
North American airlines' freight volumes expanded 2.8% in August 2018 compared to the same period a year earlier. Capacity increased by 3.2% over the same period. The recent momentum of the US economy and solid trade flows across the Atlantic have helped strengthen demand for air cargo, benefiting US carriers.
 
A pick-up in supply chain bottlenecks, which is typically alleviated by the speed of air freight, may also be benefiting the demand.  
 
European airlines posted the fastest growth of any region in August 2018, with an increase in demand of 3.7% compared to the same period a year earlier.
Despite a weakening in manufacturing firms' export order books in Europe, particularly Germany, international air cargo demand has trended upwards at an annualized rate of 8% over the last six months. Strong conditions on the transatlantic market and a pickup in demand between Europe and Asia have driven this growth. Capacity increased by 5.2% year-on-year. 
 
Middle Eastern carriers' carriers posted a 2.2% increase in freight volumes in August 2018 compared to the same period last year. This was a significant deceleration in demand over the 5.4% recorded the previous month. The decrease mainly reflects developments from a year ago rather than a substantive change in the near-term trend. International cargo demand is trending upwards at an annualized rate of 6% in the region supported by a pick-up in trade to/from Europe and Asia. Capacity increased 7.9% year-on-year.
 
Latin American airlines experienced an increase in freight demand growth in August 2018 of 1.6% compared to the same period last year and capacity increased by 5.3%. Some of the smaller markets within the region have seen strong growth in international freight volumes so far this year. Nevertheless, the broader pick-up in demand seen over the last 18 months has now paused. 
 
African carriers saw freight demand contract by 7.1% in August 2018, compared to the same month last year. This was the fifth time in six months that demand contracted. Capacity increased by 6.0% year-on-year. After a peak in demand at the end of 2017, seasonally-adjusted international freight volumes have stopped declining in recent months. However, they remain 8% lower than the November 2017 peak. Demand conditions on all key markets to/ from Africa remain weak.  



Posted by : GoDubai Editorial Team
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Posted on : Monday, October 1, 2018  
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