IATA reports March air freight growth slips to its lowest level in 22 months

May 03, 2018: The International Air Transport Association’s (IATA) recently released cargo traffic figures for the month of March revealed that the sector has seen the slowest pace of growth in 22 months.

Air freight demand, measured in freight tonne kilometres (FTKs), rose 1.7 percent in March 2018, compared to the same period the year before. This was five percentage points lower than the February result.

The year-on-year increase in capacity, measured in available freight tonne kilometres (AFTK) fell to 4.4 percent compared to 6.3 percent in February. This was the first time in 20 months, however, that annual capacity rose faster than demand.

The reason cited for the slowdown in growth is the end of the destocking cycle, during which businesses rapidly increased their inventory to meet unexpectedly high demand. A softening of global trade is also evident.

“It’s normal that growth slows at the end of a restocking cycle. That clearly has happened. Looking ahead we remain optimistic that air cargo demand will grow by 4-5 percent this year. But there are obviously some headwinds. Oil prices have risen strongly, and economic growth is patchy. The biggest damage could be political. The implementation of protectionist measures would be an own-goal for all involved—especially the US and China,” said Alexandre de Juniac, IATA’s director general and CEO.

Coming down to individual regions, the figures highlighted that all regions except Latin America reported year-on-year declines in growth in March, with Africa in negative territory.

African FTKs fell by 3.4 percent in March. This result may, however, be influenced by the comparison with unusually strong growth in March 2017.

While Asia Pacific carriers reported slight FTK growth of just 0.7 percent compared to the same period a year ago. This is particularly due to falling in export orders in Japan and Korea in recent months and the region remains particularly exposed to the impact of protectionist measures.

European airlines FTKs rose 1.0 percent in March compared to March 2017. “A stronger Euro and a softening of export orders in Germany partially explain the result, but the seasonally-adjusted trend in FTKs has been slowing in recent months,” informs IATA.

Latin American carriers posted the strongest growth, due to the recovery of Brazilian economy over the past 18 months.

Middle East carriers saw growth of 0.8 percent in March compared to March 2017.

North American carriers’ freight volumes expanded 3.9 percent compared to March 2017. The US inventory-to-sales ratio has risen in 2018, indicating the boost to cargo growth from restocking is over.