Home » Aviation, Breaking News » IATA finds 3 indicators of slower growth in air freight

After a weak start to 2018, demand for global air freight has now resumed a modest trend upwards, rising 4.2% in May year-over-year but slightly down from the 5.2% growth in annual demand recorded in April 2018, according to data released by the International Air Transport Association (IATA).

Freight capacity grew by 6.2% year-on-year in May 2018, the fourth month in a row that capacity growth outstripped demand growth.

IATA said that the rapid growth seen in 2017 is now over, as demand is seen to grow at a significantly slower pace in 2018.

It said there are three indications that growth will continue more slowly:

  • the re-stocking cycle which required quick delivery to meet customer needs is over;
  • the new export orders component of the global manufacturing Purchasing Managers’ Index is at a 21-month low; and
  • global trade appears to be softening as trade tensions increase.

“We expect air cargo demand to grow by a modest 4.0% in 2018. That’s an uptick from a very weak start to the year. But headwinds are strengthening with growing friction among governments on trade,” said Alexandre de Juniac, IATA’s director general and CEO.

“We still expect demand to grow, but those expectations are dampened with each new tariff introduced. Experience tells us that trade wars, in the long run, only produce losers,” he added.

All regions except Africa reported an increase in growth in May 2018.

Asia-Pacific airlines saw freight demand increase in May to 4.9% compared to the same period last year, higher than the 3.9% recorded the previous month. Capacity increased by 7.4%.

“As the largest freight-flying region, carrying close to 37% of global air freight, the risks from protectionist measures impacting the region are disproportionately high,” said IATA. Still, there are signs that demand is accelerating for international freight, it noted.

North American airlines’ freight volumes expanded 5.9% in May compared to the same period a year earlier, up from the 4.6% rate of growth recorded the previous month. The recent momentum of the U.S. economy and the U.S. dollar has helped strengthen demand for air imports.

European airlines posted a 2.3% increase in freight volumes in May 2018, a slowdown from the 3.5% rate of growth the previous month. The annualized rate of growth over the past six months remains low at only 1.5%.

Middle Eastern carriers’ freight volumes grew 2.4% in May 2018, significantly down from over 6.9% the previous month.

Latin American airlines experienced growth in demand of 11.4% in May 2018—the largest increase of any region for the third consecutive month. The pick-up in demand over the last 18 months comes alongside signs of economic recovery in the region’s largest economy, Brazil.

African carriers saw freight demand contract 2.0% in May 2018 compared to the same month last year. This mainly reflects a softening in demand on markets to/from Asia and the Middle East.

Photo: shimin

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