Demand for air freight up 3.5 percent y/y in 2018
Feb 7, 2019: The latest air freight 2018 figures released by the International Air Transport Association (IATA) show us that demand, measured in freight tonne kilometers (FTKs), grew by 3.5 percent compared to 2017.
This was significantly lower than the extraordinary 9.7 percent growth recorded in 2017. Airlines in all regions with the exception of Africa reported an annual increase in demand in 2018. The Geneva-headquartered industry body says that the performance in 2018 was sealed by a softening in demand in December.
Freight capacity, measured in available freight tonne kilometers (AFTKs), rose by 5.4 percent in 2018, outpacing annual growth in demand. This exerted downward pressure on the load factor but yields proved resilient.
One of the factors that helped stimulate growth in air freight demand was that international e-commerce grew in 2018.
On the other hand, weakening of global economic activity, weakening of consumer confidence compared to very high levels at the beginning of 2018 are some the factors that led to the softening of demand. Also, the restocking cycle, during which businesses rapidly built up inventories to meet demand, ended in early 2018 and the export order books of all major exporting nations, with the exception of the US, contracted in the second half of 2018.
%u201CAir cargo demand lost momentum towards the end of 2018 in the face of weakening global trade, sagging consumer confidence and geopolitical headwinds. Still, demand grew by 3.5 percent compared to 2017. We are cautiously optimistic that demand will grow in the region of 3.7 percent in 2019. But with the persistence of trade tensions and protectionist actions by some governments there is significant downside risk. Keeping borders open to people and to trade is critical,%u201D said Alexandre de Juniac, IATA%u2019s director general and CEO.
%u201CTo attract demand in new market segments, the air cargo industry must improve its value proposition. Enabling modern processes with digitalization will help build a stronger foothold in e-commerce and the transport of time- and temperature-sensitive goods such as pharmaceuticals and perishables,%u201D said de Juniac.
Coming to December statistics, demand decreased by 0.5 percent year-on-year. This was the worst performance since March 2016. Freight capacity, however, grew by 3.8 percent. This was the tenth month in a row that year-on-year capacity growth outstripped demand growth.
Asia-Pacific carriers posted the weakest growth of any region in December 2018 with a decrease in demand of 4.5 percent compared to the same period a year earlier. Capacity increased by 2.6 percent. Signs of a moderation in economic activity in China and an escalation of trade tensions continue to pose a downside risk to air cargo in Asia-Pacific.
North American airlines posted the fastest growth of any region for the seventh consecutive month in December 2018 with an increase in demand of 2.9 percent compared to the same period a year earlier. Capacity increased by 4.5 percent. The strength of the US economy and consumer spending have helped support the demand for air cargo over the past year, benefiting US carriers.
European airlines posted a 1.9 percent year-on-year increase in freight demand in December 2018 and a capacity rise of 3.7 percent.
Middle Eastern carriers%u2019 freight volumes increased 0.1 percent year-on-year in December and capacity increased 4.5 percent.
Latin American airlines experienced a decrease in year-on-year demand of 0.1 percent in December after three months of positive growth. Capacity increased by 6.0 percent. Despite a decrease in demand, it%u2019s worth noting that the within South America market continues to perform strongly, with international demand up almost 20 percent year-on-year.
African carriers%u2019 saw freight demand decrease by 2.2 percent, in December 2018, compared to the same month in 2017. This was significantly less than the 9.4 percent decrease the previous month. Capacity increased by 4.9 percent year-on-year.
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