By Emmie V. Abadilla
Global air freight demand, measured in freight tonne kilometers (FTKs), flattened out at 0% in November, 2018, the slowest rate of growth recorded since March, 2016, following 31 consecutive months of year-on-year increases, according to the latest data from the International Air Transport Association (IATA).
Freight capacity, measured in available freight tonne kilometers (AFTKs), rose by 4.3% year-on-year, the ninth month in a row that capacity growth outstripped demand.
“Normally the fourth quarter is a peak season for air cargo. So, essentially flat growth in November is a big disappointment,” remarked Alexandre de Juniac, IATA’s Director General and CEO.
“While our outlook is for 3.7% demand growth in 2019, downside risks are mounting. Trade tensions are cause for great concern. We need governments to focus on enabling growth through trade, not barricading their borders through punitive tariffs,” he warned.
Even as international e-commerce continues to grow, IATA observed signs of weakness in global economic activity, a contraction in export order books in all major exporting nations, except the US; shorter supplier delivery times in Asia and Europe, along with weakened consumer confidence compared to very high levels at the beginning of 2018.
Notably, three of the six regions reported year-on-year demand growth in November 2018 – North America, Middle East and Latin America. Asia Pacific, Europe and Africa all contracted.
Asia-Pacific airlines saw demand for air freight shrink by 2.3% in November 2018, compared to the same period in 2017.
This was the first time since May, 2016 that monthly year-on-year demand declined. Weaker manufacturing conditions for exporters and shorter supplier delivery times particularly in China impacted the demand. Capacity increased by 3.1%.
Middle Eastern airlines’ freight volumes expanded 1.7% in November 2018 compared to the same period a year earlier. Capacity increased by 7.8% over the same period.
Seasonally-adjusted international air cargo demand has now trended upwards for the past six months helped by stronger trade to and from Europe and Asia.
North American airlines posted the fastest growth of any region for the second consecutive month in November 2018 with an increase in demand of 3.1% compared to the same period a year earlier.
Capacity increased by 6.3%. The strength of the US economy and consumer spending have helped support the demand for air cargo over the past year, benefiting US carriers.
Latin American airlines’ freight demand rose 3.1% in November 2018 compared to the same period in 2017. Capacity increased by 2.0%. International year-to-date demand recovered into positive territory, increasing 6.3%.
However, the key markets to and from the region are showing signs of weakness, particularly between South America and Europe, which contracted in year-on-year terms in October (last data available).
European airlines experienced a contraction in freight demand of -0.2% in November 2018 compared to the same period a year earlier. Capacity increased by 3.1% year-on-year.
Weaker manufacturing conditions for exporters, and shorter supplier delivery times particularly in Germany, one of Europe’s key export markets, brought down demand.
African carriers saw freight demand decrease by 7.8% in November 2018, compared to the same month in 2017. This was the eighth time in nine months that demand contracted. Capacity shrank 7.4% year-on-year.
Demand conditions on all key markets to and from Africa remain weak. Seasonally-adjusted international freight volumes are 7% lower than their peak in mid-2017, nonetheless, they are still 28% higher than their most recent trough in late-2015.