Global air freight sector gets off to a strong start in 2018: IATA

March 7, 2018: The recent data release by the International Air Transport Association (IATA) for global air freight markets indicated that the demand measured in freight tonne kilometers (FTKs), rose eight percent in January 2018, compared to the same period last year. It was up from the 5.8 percent annual growth recorded in December 2017.

Similarly, the freight capacity measured in available freight tonne kilometers (AFTKs), rose by 4.2 percent year-on-year in January 2018.

The continued positive momentum in the freight growth in 2018 highlighted the fact that demand drivers for air cargo remained supportive.

The global demand for manufacturing exports was buoyant, hence the strong demand led to a longer supply chain delivery times. This is likely to further strengthen the growth in the air cargo sector, with companies demanding faster delivery to make up for longer production times.

“With eight percent growth in January, it’s been a solid start to 2018 for the air cargo sector. It’s an exceptional year in which demand grew by nine percent. We expect the demand for air cargo to taper to a more normal 4.5 percent growth during 2018. But the sector is like to brace for potential headwinds. If President Trump follows through on his promise to impose sanctions on aluminum and steel imports, there will be a possible risk of a trade war. Nobody wins when protectionist measures escalate,” said Alexandre de Juniac, director general and CEO of IATA.

REGIONAL PERFORMANCE

Asia-Pacific airlines witnessed a 7.7 percent growth in freight volumes in January 2018, with increase in capacity by 2.2 percent, compared to the same period in 2017.

The increase largely reflected the ongoing strong demand from the region’s major exporters, such as China and Japan, which was driven by a pick-up in economic activity in Europe. However, the upward-trend in seasonally-adjusted volumes took a breather.

The freight volumes of North American airlines surged 7.5 percent year-on-year in January 2018, as capacity increased by 4.2 percent. The strength of the US economy and the US dollar further helped in improving the inbound freight market in the recent years. However, this was offset by the weakening of Dollar, despite hope of revival in freight volumes from the recently-agreed US tax reform. In fact, the seasonally-adjusted volumes were broadly trending sideways.

On the other hand, European airlines posted a 10.5 percent increase in freight volumes in January 2018. Capacity also increased by 5.3 percent. The strong European performance corresponded with a healthy demand for new export orders from the region’s manufacturers. Seasonally-adjusted volumes also jumped three percent in month-on-month terms in January, which was the largest increase since March 2017.

The freight volumes of the Middle Eastern carriers also witnessed increase by 4.4 percent year-on-year in January 2018, which was the slowest growth in the region. The capacity also increased by 6.3 percent. Seasonally adjusted freight volumes continued to trend upwards during January, however, the region’s carriers remain affected by the ongoing challenging political environment in the Middle East.

Latin American airlines experienced a growth in demand of eight percent in January. Capacity increased by 5.4 percent. The pick-up in demand came alongside signs of economic recovery in the region’s largest economy, Brazil. Seasonally-adjusted international freight volumes were back to the level seen at the end of 2014.

Meanwhile, African carriers’ also saw increase in freight demand by 12.9 percent in January 2018, compared to the same month last year. The increase was due to the strong growth in the trade lanes to and from Asia. Freight demand jumped by 59 percent between Africa and Asia in 2017, following an increase in the number of direct flights between the continents, driven by ongoing foreign investment flows into Africa.