Air freight demand swings back to growth in March after four months' contraction

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May 8, 2018: Global air freight demand, measured in freight tonne kilometers (FTKs), has seen slight increase of 0.1 percent year-on-year in March, reports International Air Transport Association (IATA). While this is a significant improvement on the 4.9 percent contraction in February, in seasonally adjusted terms, demand is still down 1.5 percent over the past year.

On the other hand, capacity saw 3.1 percent year-on-year increase in March 2019. Capacity growth has now outstripped demand growth for 11 out of the last 12 months, according to statistics from the industry body.

The weakening of air freight demand is due to several factors, one of them being decrease in global trade volumes by 1 percent over the past year. Also, global economic activity and consumer confidence continue to weaken. And the export order component of the global manufacturers Purchasing Managers Index (PMI) has indicated falling global export orders since September 2018.

March figures region-wise surprise us as this time in place of Africa, it is Asia-Pacific region which has seen decline in demand.

All other regions reported year-on-year demand growth in March 2019.

Weaker manufacturing conditions for exporters in the region, ongoing trade tensions and a slowing of the Chinese economy led to 3.4 percent year-on-year decrease in demand in March 2019. This was a significant improvement from the 12.0 percent decline in growth from the previous month. 

North American airlines saw demand increase by 0.4 percent in March 2019, compared to the same period a year earlier. The recent easing of growth is partly due to a slowing of US domestic economic activity in the later part of 2018 and falling global trade volumes. Despite this, new export orders are rising which would support air cargo growth. Capacity increased by 2.6 percent over the past year. 

March performance of the European airlines reflects positive growth despite the weaker manufacturing conditions for exporters in Germany, and uncertainty over Brexit. The airlines posted a 3.6 percent increase in freight demand in March 2019 compared to the same period a year earlier. Capacity increased by 6.4 percent year-on-year. 

Middle Eastern airlines’ freight volumes increased 1.3 percent in March 2019 compared to the year-ago period. Capacity increased by 3.8 percent. A clear downward trend in seasonally-adjusted international air cargo demand is now evident with weakening air freight volumes to/from North America and to/from Asia Pacific contributing to the softer performance.    

Latin American airlines experienced an increase in freight demand growth in March 2019 of 3.6 percent compared to the same period last year and capacity increased by 16.9 percent. The emergence of the Brazilian economy from recession is supporting a resurgence in air cargo demand. Nevertheless, ongoing economic and political uncertainties in various parts of the region continue to present challenges for the industry. 

African carriers posted the fastest growth of any region in March 2019, with an increase in demand of 6.0 percent compared to the same period a year earlier. Seasonally-adjusted international freight volumes are lower than their peak in mid-2017; despite this, they are still around 30 percent higher than their most recent trough in late-2015. Capacity grew 15.2 percent year-on-year.

“Year-on-year demand for air freight edged back into positive territory in March with 0.1 percent growth. After four consecutive months of contraction, this is an encouraging development. But the headwinds from weakening global trade, growing trade tensions and shrinking order books have not gone away,” said Alexandre de Juniac, IATA's director general and CEO.

Industry confidence regarding the outlook, however remains relatively upbeat with only 13 percent of respondents from IATA’s Business Confidence Survey expecting to see a decrease in freight volumes in 2019 compared to 2018.

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