Air freight demand dips at peak season

Published January 9, 2020, 12:00 AM

by manilabulletin_admin


Global air freight demand, measured in freight tonne kilometers (FTKs), dipped 1.1% in November, 2019, smack at the peak of the season.

It was the 13th consecutive month of year-on-year declines in freight volumes due to the trade war between the US and China and a slowdown in the world’s economic growth, according to the latest International Air Transport Association (IATA) data.

Interestingly, November’s performance was the best in eight months, despite the decline in demand. It showed the slowest year-on-year rate of contraction recorded since March 2019. In part, November’s outcome reflected the growing importance of large e-commerce events, such as Singles Day in Asia and Black Friday.

While demand for air cargo went down 1.1%, “That’s better than the 3.5% decline posted in October,” noted Alexandre de Juniac, IATA’s Director General and CEO.

Still, “It is a big disappointment, considering that the fourth quarter is usually air cargo’s peak season. Looking forward, signs of a thawing in US-China trade tensions are good news. But trading conditions at present remain very challenging,” he added.

Freight capacity, measured in available freight tonne kilometers (AFTKs), rose by 2.9% year-on-year in November 2019. Capacity growth has now outstripped demand growth for 19 consecutive months.

Airlines in Asia-Pacific, Latin America and the Middle East suffered sharp declines in year-on-year growth in total air freight volumes in November 2019, while North American carriers experienced a more moderate decline. Europe and Africa were the only regions to record growth in air freight demand compared to November 2018.

Asia-Pacific airlines saw demand for air freight contract by 3.7%, the sharpest drop in freight demand of any region for the month. Capacity increased by 1.8%.
The US-China trade war significantly affected the region, with demand on the large Asia-North America market down 6.5% year-on-year in October.

Nevertheless, the thawing of US-China trade relations and robust economic growth in key regional economies are positive developments.

Middle Eastern airlines’ freight volumes decreased 3.0% – a significant improvement over the 5.7% decrease in October. Capacity increased by 2.6%.

With operational and geopolitical challenges facing some of the region’s key airlines, seasonally-adjusted freight volumes in the region have continued a modest upwards trend, which is a positive development for the region’s carriers. However, escalating geopolitical tensions threaten the regions’ carriers in the period ahead.

North American airlines saw demand decrease by 1.1% while capacity increased 3.3%. Slower growth in the US economy and trade tensions with China have affected demand. However, positive progress in trade negotiations between both countries highlighted by the ‘phase one’ deal is a positive development.

Latin American airlines experienced a 3.4% decrease in freight demand after various social and economic headwinds in the region’s key economies affected the region’s air cargo performance. Capacity decreased by 2.3% year-on-year.

European airlines posted a 2.6% increase in freight demand, better than expected economic activity in the third quarter in some of the region’s large economies helped support demand. Capacity increased by 4.0% year-on-year.

African carriers posted the fastest growth, with an increase in demand of 19.8% compared to the same period a year earlier. Strong trade and investment links with Asia contributed to the positive performance. Capacity grew 13.7% year-on-year.