Air freight capacity outstrips demand for the ninth consecutive month: IATA
Sep 6, 2019: As air cargo continues to suffer from weak global trade and the intensifying trade dispute between the US and China, International Air Transport Association (IATA) announced contraction in demand in July for the ninth consecutive month. The air cargo demand, measured in freight tonne kilometers (FTKs), contracted by 3.2 percent in July […]
Sep 6, 2019: As air cargo continues to suffer from weak global trade and the intensifying trade dispute between the US and China, International Air Transport Association (IATA) announced contraction in demand in July for the ninth consecutive month.
The air cargo demand, measured in freight tonne kilometers (FTKs), contracted by 3.2 percent in July 2019, compared to the same period in 2018. On the other hand, capacity, measured in available freight tonne kilometers (AFTKs), rose by 2.6 percent year-on-year in July 2019.
IATA said through a statement: “Global trade volumes are 1.4 percent lower than a year ago and trade volumes between the US and China have fallen by 14 percent year-to-date compared to the same period in 2018.”
The airlines body added: “The global Purchasing Managers Index (PMI) does not indicate an uptick. Its tracking of new manufacturing export orders has pointed to falling orders since September 2018. And for the first time since February 2009 all major trading nations reported falling orders.”
The US-China trade war and weaker manufacturing conditions for exporters in the Asia-Pacific region have significantly impacted the air freight market. The region’s airlines noted a sharp decline of 4.9 percent year-on-year, while capacity increased by 2.5 percent over the past year.
As APAC region accounts for more than 35 percent of total FTKs, this performance is the major contributor to the weak industry-wide outcome.
Similarly, Middle Eastern airlines reported sharp decline in demand. Escalating trade tensions and the slowing in global trade led to 5.5 percent decline in volumes in July 2019, compared to the year-ago period. This was the sharpest drop in freight demand of any region. Capacity increased by 0.2 percent
While, North America and Europe experienced more moderate declines.
North American airlines saw demand decrease by 2.1 percent in July 2019, compared to the same period a year earlier. Capacity increased by 1.6 percent over the past year. Despite a sound economic backdrop supporting consumer spending, the US-China trade tensions continue to weigh on the region’s carriers. Freight demand between Asia and North America have fallen by almost 5 percent in year-on-year terms.
The demand for European airlines dipped by 2.0 percent year-on-year in July this year. Weaker manufacturing conditions for exporters in Germany, heightened recession fears, and ongoing uncertainty over Brexit, have impacted the recent performance. Capacity increased by 4.2 percent year-on-year.
Africa and Latin America both recorded growth in air freight demand compared to July last year.
Latin American airlines experienced an increase in freight demand growth in July 2019 of 3.0 percent compared to the same period last year and capacity increased by 2.7 percent. The recovery of the Brazilian economy, to avoid a recession, was a positive development; however, concerns regarding the outlook for some key Latin American countries including Argentina remain.
July figures show Africa as the strongest performer for the sixth consecutive month. African carriers posted the fastest growth of any region in July 2019, with an increase in demand of 10.9 percent compared to the same period a year earlier. This continues the upwards trend in FTKs that has been evident since mid-2018. Capacity grew 17 percent year-on-year. Strong trade and investment linkages with Asia have underpinned a double-digit increase in air freight volumes between the two regions over the past year.
“Trade tensions are weighing heavily on the entire air cargo industry. Higher tariffs are disrupting not only transpacific supply chains but also worldwide trade lanes. While current tensions might yield short-term political gains, they could lead to long-term negative changes for consumers and the global economy. Trade generates prosperity. It is critical that the US and China work quickly to resolve their differences,” said Alexandre de Juniac, IATA's director general and CEO.