Flat growth in air cargo demand in November is a big disappointment, says IATA

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Jan 9, 2019: The air cargo demand measured in freight tonne kilometers (FTKs) saw flat growth (0 percent) in November 2018, compared to the same period the year before, according to latest figures released by industry body International Air Transport Association (IATA). 

IATA states this growth, which was slowest rate of growth recorded since March 2016, following 31 consecutive months of year-on-year increases, is a ‘big disappointment’.

In the reporting month, capacity, measured in available freight tonne kilometers (AFTKs), rose by 4.3 percent year-on-year. This was the ninth month in a row that capacity growth outstripped demand. 

IATA states that while international e-commerce continues to grow, contraction in export order books in all major exporting nations, with the exception of the US; shorter supplier delivery times in Asia and Europe; and weakened consumer confidence compared to very high levels at the beginning of 2018, impacted overall demand. 

“Normally the fourth quarter is a peak season for air cargo. So essentially flat growth in November is a big disappointment. While our outlook is for 3.7 percent demand growth in 2019, downside risks are mounting. Trade tensions are cause for great concern. We need governments to focus on enabling growth through trade, not barricading their borders through punitive tariffs,” said Alexandre de Juniac, IATA’s director general and CEO.

Surprisingly, Asia-Pacific airlines saw demand for air freight shrink by 2.3 percent in November 2018, compared to the same period in 2017. This was the first time since May 2016 that monthly year-on-year demand declined. Weaker manufacturing conditions for exporters and shorter supplier delivery times particularly in China impacted the demand. Capacity increased by 3.1 percent.

On the other hand, strength of the US economy and consumer spending have helped North American carriers post the fastest growth of any region for the second consecutive month in November 2018. The carriers saw an increase of 3.1 percent in demand and capacity increased by 6.3 percent in November 2018. 

European airlines experienced a contraction in freight demand of -0.2 percent in November 2018 compared to the same period a year earlier. Capacity increased by 3.1 percent year-on-year. Weaker manufacturing conditions for exporters, and shorter supplier delivery times particularly in Germany, one of Europe’s key export markets, impacted demand. 

Middle Eastern airlines’ freight volumes expanded 1.7 percent in November 2018 compared to the same period a year earlier. Capacity increased by 7.8 percent over the same period. Seasonally-adjusted international air cargo demand has now trended upwards for the past six months helped by stronger trade to/from Europe and Asia. 

Latin American airlines’ freight demand rose 3.1 percent in November 2018 compared to the same period in 2017. Capacity increased by 2.0 percent. International year-to-date demand recovered into positive territory, increasing 6.3 percent. The key markets, however, to and from the region are showing signs of weakness, particularly between South America and Europe, which contracted in year-on-year terms in October (last data available).

Demand for African carriers continues to contract for the eighth time in nine months. African carriers saw freight demand decrease by 7.8 percent in November 2018, while capacity shrank 7.4 percent year-on-year. Demand conditions on all key markets to and from Africa remain weak. Seasonally-adjusted international freight volumes are 7 percent lower than their peak in mid-2017, nonetheless, they are still 28 percent higher than their most recent trough in late-2015.

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