August: another month of double digit growth for air cargo
October 5, 2017: Global air freight markets showed that demand, measured in freight tonne kilometers (FTKs), increased by 12.1 percent in August 2017, compared to the same period a year ago, according to the recent report released by industry body the International Air Transport Association (IATA). This was the fifth time in six months of double-digit gains on the previous year’s performance. Demand is growing at exceptional speed when compared to the five-year average growth rate of 4.4 percent.
Freight capacity, measured in available freight tonne kilometers (AFTKs), grew by 4.7 percent year-on-year in August 2017. Demand growth continues to significantly outstrip capacity growth, which is positive for industry load factors, yields, and financial performance.
All regions except Latin America posted double-digit annual international volume growth in the month.
“The strong performance of air freight demand corresponds with the pick-up in global trade. World trade volumes grew 4.2 percent in the first seven months of 2017 compared to 2016, their strongest performance since 2011. This is consistent with rising export orders, which are currently around their highest levels since March 2011, and upbeat business confidence indicators,” reports IATA.
Signs that the peak of the cyclical growth period may be near also continue. The global inventory-to-sales ratio in the US, for example, has stopped falling. This usually means that re-stocking to meet demand (which gives air freight a boost), is ending.
The outlook for air freight remains strong. With several months of double-digit growth in 2017, the current IATA forecast of 7.5 percent growth in air freight demand for 2017 appears to have significant upside potential even if we are approaching a cyclical peak.
"Air cargo had another stellar performance in August. Demand for air cargo grew at a double-digit rate for the fourth month in a row - outperforming demand for passenger travel for the fourth consecutive month. Rapid growth in cargo demand means that cargo capacity is now growing in response to real cargo demand rather than automatically as carriers responded to passenger demand. The pace of capacity growth, however, has slowed even as freighter fleets are being utilized more intensely. Overall, that should be good news for much beleaguered cargo yields," said Alexandre de Juniac, IATA’s director general and CEO.