Global freight volumes register 2.3% upturn in August – IATA

Buoyant consumer confidence, an upturn in the global investment cycle
and growing international e-commerce pushed global air freight
demand, measured in freight tonne kilometers (FTKs), by 2.3% this
August versus the same period in 2017, according to the latest data
from the International Air Transport Association (IATA).

This pace of growth was unchanged from the previous month but was
less than half the five-year average growth rate of 5.1%.

Freight capacity, measured in available freight tonne kilometers
(AFTKs), grew by 4.5% year-on-year in August 2018, the sixth month in
a row that capacity growth outstripped demand growth. Yields,
however, appear to be holding up.

Nevertheless, a broad-based weakening in manufacturing firms’ export
order books, specifically, export order books in Europe, China, Japan
and Korea have fallen in recent months.

Manufacturers in Asia and Europe, the top two global trading areas by
volume are also reporting longer supplier delivery times This
typically means that they have less need for the speed afforded by
air freight.

Furthermore, increasing trade tension is threatening global trade.

“August demand for air cargo grew at 2.3%, unchanged from the
previous month. Consumer confidence, the growth of international e-
commerce and the broad-based global economic upturn are behind the
growth,” Alexandre de Juniac, IATA’s Director General and CEO
explained.

“But there are downside risks. Order books are weakening and supply
delivery times are lengthening. And the growing trade tensions are a
specter over the industry,” he warned.
“The early focus of tariffs was not on products typically carried by
air. But as the list of tariffs grows so does the air cargo
industry’s vulnerability. We can expect souring trading relations to
eventually impact business travel. There are no winners in trade
wars.”

All regions reported year-on-year demand growth in August 2018,
except Africa which contracted. All regions reported that capacity
growth exceeded growth in demand.

Asia-Pacific airlines saw demand for air freight grow by 1.6% in
August 2018 compared to the same period last year. This was an
increase over the previous month but a marked slowdown in growth from
the past year.

Weaker manufacturing conditions for exporters, particularly in Japan
and China, have impacted the demand. As the largest freight-flying
region, carrying more than one-third of the total, the risks from
protectionist measures are disproportionately high. Capacity
increased by 3.4%.

Middle Eastern carriers’ carriers posted a 2.2% increase in freight
volumes in August 2018 compared to the same period last year. This
was a significant deceleration in demand over the 5.4% recorded the
previous month.

The decrease mainly reflects developments from a year ago rather than
a substantive change in the near-term trend. International cargo
demand is trending upwards at an annualized rate of 6% in the region
supported by a pick-up in trade to/from Europe and Asia. Capacity
increased 7.9% year-on-year.

North American airlines’ freight volumes expanded 2.8% in August
2018 compared to the same period a year earlier. Capacity increased
by 3.2% over the same period.

The recent momentum of the US economy and solid trade flows across
the Atlantic have helped strengthen demand for air cargo, benefiting
US carriers. A pick-up in supply chain bottlenecks, which is
typically alleviated by the speed of air freight, may also be
benefiting the demand.

Latin American airlines experienced an increase in freight demand
growth in August 2018 of 1.6% compared to the same period last year
and capacity increased by 5.3%. (EVA)