Trade slowdown in emerging Asia slices airfreight demand

0
303

Korean AirAir cargo carriers in Asia-Pacific saw a decline in demand in June, as 2015 is turning out to be a disappointment compared to the strong performance of the market last year, according to the International Air Transport Association (IATA).

Overall airfreight volumes measured in freight tonne kilometers (FTK) rose just 1.2% in June compared to a year ago, consistent with falling trade activity and weakerthan-expected global growth, the latest data from IATA shows.

Along with North American and Latin American carriers, Asia-Pacific airlines reported a year-over-year decline in June, while European carriers reported that markets were flat. In contrast, Middle Eastern and African carriers kept growth in positive territory for the period.

Asia-Pacific carriers saw a fall in FTKs of 0.3% in June year-over-year, and capacity expanded 4%. “The region has experienced a notable slowdown in imports and exports over recent months, and latest data shows emerging Asia trade activity down 8%,” said IATA. “Growth for the year-to-date was 5.4%.”

In addition to generally weak trade growth, the region is the most exposed to the China market where government policies are more focused on stimulating domestic markets.

“The general trend of a weaker 2015 compared to 2014 can be seen in the half-year data. Airfreight markets expanded by 5.8% in 2014; however year-to-date growth for 2015 stands at 3.5%,” said IATA.

“The half-year report for air cargo is not encouraging. With growth of just 1.2% over June last year, markets are basically stagnating. Some carriers are doing better than others at picking up the business that is out there. But overall it has been a disappointing first half of 2015, especially considering the strong finish to 2014.”

In the months ahead, IATA said signals appear mixed. “The general expectation is for an acceleration of economic growth, but business confidence and export orders look weak,” said Tony Tyler, IATA’s director general and CEO.

Of the two other regional carriers that registered decelerated business in June, North American airlines experienced a decline of 3.3% year-over-year and capacity grew 2.8%. The positive impact of a modal shift to air as a result of the strike at West Coast ports has faded and economic performance, despite some improvement in the second quarter, is subdued. Growth for the first six months of the year was -0.4%.

Latin American airlines reported a fall in demand of 1.6% year-over-year and capacity expanded 3.7%. Regional trade activity has grown in the first half of 2015, despite continuing weakness in Brazil and Argentina. Unfortunately this has not translated into stronger demand for airfreight. Growth for the year-to-date was -6.9%.

European carriers reported flat demand in June (0.0%) compared to a year ago and capacity rose 2.2%. Improvements in Eurozone business confidence have not led to increased airfreight demand, and consumer confidence has been hit by the Greek crisis. Growth for the year-to-date was -0.6%.

On the other hand, Middle Eastern carriers saw the strongest growth with demand expanding by 15.3%, and capacity rose 19.2%. Airlines in the region have pursued a successful hub strategy connecting both long- and short-haul markets. Although some major economies in the region have seen slowdowns in non-oil sectors, economic growth remains generally robust, which is also helping to sustain demand for airfreight. Growth for the year-to-date is running at 14%.

African carriers also experienced growth in demand, up 6.7% year-over-year, and capacity rose by the same amount. The Nigerian and South African economies have underperformed for much of the year so far; however, regional trade has held up. Demand growth for the first six months was 4.8%.

Photo: Korean airline