Air freight posts modest trend upwards
Published Jul 11, 2018 12:00 am
By Emmie V. Abadilla
After a weak start in early 2018, demand for global air freight, measured in freight ton kilometers (FTKs), has now resumed a modest trend upwards, on rising 4.2 percent in May 2018, versus the same period last year, according to the International Air Transport Association (IATA).
International Air Transport Association (IATA) logo (MB file/mb.com.ph)
Freight capacity, measured in available freight ton kilometers (AFTKs), grew by 6.2 percent year-on-year in May 2018. This was the fourth month in a row that capacity growth outstripped demand growth.
However, the rapid growth seen in 2017 is now over, with demand growing at a significantly slower pace in 2018. In IATA’s mid-year industry outlook, 2018 freight growth was revised downwards to 4.0 percent, from the previously forecasted 4.5 percent in December 2017.
“We expect air cargo demand to grow by a modest 4.0 percent in 2018,” explained Alexandre de Juniac, IATA's Director General and CEO.
“That’s an uptick from a very weak start to the year. But headwinds are strengthening with growing friction among governments on trade. We still expect demand to grow, but those expectations are dampened with each new tariff introduced. Experience tells us that trade wars, in the long run, only produce losers."
IATA underscored three indicators of a slower growth.
First, the re-stocking cycle which required quick delivery to meet customer needs is over. Second, the new export orders component of the global manufacturing Purchasing Managers’ Index (PMI) is at a 21-month low and third, global trade appears to be softening as trade tensions increase
So far, all regions except Africa reported an increase in growth in May 2018.
Asia-Pacific airlines saw freight demand increase in May 2018 to grow 4.9 percent compared to the same period last year. This was an increase over the 3.9 percent recorded the previous month.
Capacity increased by 7.4 percent. As the largest freight-flying region, carrying close to 37 percent of global air freight, the risks from protectionist measures impacting the region are disproportionately high. That said, there are signs that demand is accelerating for international FTK’s.
Middle Eastern carriers’ freight volumes grew 2.4 percent in May 2018. This was a significant deceleration in demand of over 6.9 percent the previous month. The decrease mainly reflects developments from a year ago rather than a substantive change in the current freight trend.
Seasonally-adjusted freight volumes continue to trend upwards at a comparatively modest pace by the region’s standards. This is consistent with signs of a broader moderation in global trade. Capacity increased 3.3 percent.
North American airlines’ freight volumes expanded 5.9 percent in April 2018 compared to the same period a year earlier. This was an increase in demand from the 4.6 percent rate of growth recorded the previous month. Capacity increased by 5.4 percent.
The recent momentum of the US economy and the US dollar has helped strengthen demand for air imports. Data from the US Census Bureau shows a 12 percent year-on-year increase in imports by air in April, compared to 2.4 percent growth in March.
Latin American airlines experienced growth in demand of 11.4 percent in May 2018 – the largest increase of any region for the third consecutive month. Capacity increased by 1.5 percent.
The pick-up in demand over the last 18 months comes alongside signs of economic recovery in the region’s largest economy, Brazil. Seasonally-adjusted international freight volumes surpassed the May 2014 peak this month.
European airlines posted a 2.3% increase in freight volumes in May 2018. This was a slowdown from the 3.5% rate of growth the previous month. Capacity increased 6.0%.
Seasonally-adjusted volumes rose slightly over the past two months; however, the annualized rate of growth over the past six months remains low at only 1.5%.
African carriers saw freight demand contract 2.0% in May 2018 compared to the same month last year. Capacity increased by 20.4%.
After a surge in international FTK volumes last year, seasonally-adjusted international freight volumes have now trended downwards at an annualized pace of 15% over the past six months. This mainly reflects a softening in demand on markets to/from Asia and the Middle East.
International Air Transport Association (IATA) logo (MB file/mb.com.ph)
Freight capacity, measured in available freight ton kilometers (AFTKs), grew by 6.2 percent year-on-year in May 2018. This was the fourth month in a row that capacity growth outstripped demand growth.
However, the rapid growth seen in 2017 is now over, with demand growing at a significantly slower pace in 2018. In IATA’s mid-year industry outlook, 2018 freight growth was revised downwards to 4.0 percent, from the previously forecasted 4.5 percent in December 2017.
“We expect air cargo demand to grow by a modest 4.0 percent in 2018,” explained Alexandre de Juniac, IATA's Director General and CEO.
“That’s an uptick from a very weak start to the year. But headwinds are strengthening with growing friction among governments on trade. We still expect demand to grow, but those expectations are dampened with each new tariff introduced. Experience tells us that trade wars, in the long run, only produce losers."
IATA underscored three indicators of a slower growth.
First, the re-stocking cycle which required quick delivery to meet customer needs is over. Second, the new export orders component of the global manufacturing Purchasing Managers’ Index (PMI) is at a 21-month low and third, global trade appears to be softening as trade tensions increase
So far, all regions except Africa reported an increase in growth in May 2018.
Asia-Pacific airlines saw freight demand increase in May 2018 to grow 4.9 percent compared to the same period last year. This was an increase over the 3.9 percent recorded the previous month.
Capacity increased by 7.4 percent. As the largest freight-flying region, carrying close to 37 percent of global air freight, the risks from protectionist measures impacting the region are disproportionately high. That said, there are signs that demand is accelerating for international FTK’s.
Middle Eastern carriers’ freight volumes grew 2.4 percent in May 2018. This was a significant deceleration in demand of over 6.9 percent the previous month. The decrease mainly reflects developments from a year ago rather than a substantive change in the current freight trend.
Seasonally-adjusted freight volumes continue to trend upwards at a comparatively modest pace by the region’s standards. This is consistent with signs of a broader moderation in global trade. Capacity increased 3.3 percent.
North American airlines’ freight volumes expanded 5.9 percent in April 2018 compared to the same period a year earlier. This was an increase in demand from the 4.6 percent rate of growth recorded the previous month. Capacity increased by 5.4 percent.
The recent momentum of the US economy and the US dollar has helped strengthen demand for air imports. Data from the US Census Bureau shows a 12 percent year-on-year increase in imports by air in April, compared to 2.4 percent growth in March.
Latin American airlines experienced growth in demand of 11.4 percent in May 2018 – the largest increase of any region for the third consecutive month. Capacity increased by 1.5 percent.
The pick-up in demand over the last 18 months comes alongside signs of economic recovery in the region’s largest economy, Brazil. Seasonally-adjusted international freight volumes surpassed the May 2014 peak this month.
European airlines posted a 2.3% increase in freight volumes in May 2018. This was a slowdown from the 3.5% rate of growth the previous month. Capacity increased 6.0%.
Seasonally-adjusted volumes rose slightly over the past two months; however, the annualized rate of growth over the past six months remains low at only 1.5%.
African carriers saw freight demand contract 2.0% in May 2018 compared to the same month last year. Capacity increased by 20.4%.
After a surge in international FTK volumes last year, seasonally-adjusted international freight volumes have now trended downwards at an annualized pace of 15% over the past six months. This mainly reflects a softening in demand on markets to/from Asia and the Middle East.