Home » Breaking News » Trade war heavily disrupting global air freight lanes—IATA

Trade tensions are making a significant impact on the entire air cargo industry, with the poor performance of Asia-Pacific airlines a major contributor to the weak industry-wide performance, according to the International Air Transport Association (IATA).

Global air freight demand contracted by 3.2% in July 2019 year-over-year, marking the ninth consecutive month of year-on-year decline in freight volumes.

Air cargo continues to suffer from weak global trade and the intensifying trade dispute between the US and China, said IATA. Global trade volumes are 1.4% lower than a year ago and trade volumes between the US and China have fallen by 14% year-to-date compared to the same period in 2018.

The global Purchasing Managers Index (PMI) does not indicate an uptick. PMI tracking of new manufacturing export orders has pointed to falling orders since September 2018. And for the first time since February 2009 all major trading nations reported falling orders.

Freight capacity rose by 2.6% year-on-year in July 2019. Capacity growth has now outstripped demand growth for the ninth consecutive month.

“Trade tensions are weighing heavily on the entire air cargo industry. Higher tariffs are disrupting not only transpacific supply chains but also worldwide trade lanes,” said Alexandre de Juniac, IATA’s director general and CEO.

Airlines in Asia-Pacific and the Middle East suffered sharp declines in year-on-year growth in total air freight volumes in July 2019, while North America and Europe experienced more moderate declines. Africa and Latin America both recorded growth in air freight demand compared to July last year.

Asia-Pacific airlines saw demand for air freight contract by 4.9% in July 2019 compared to the same period in 2018. The US-China trade war and weaker manufacturing conditions for exporters in the region have significantly impacted the market. With the region accounting for more than 35% of total demand, this performance is the major contributor to the weak industry-wide outcome.

North American airlines saw demand decrease by 2.1% in July 2019 compared to the same period a year earlier. Despite a sound economic backdrop supporting consumer spending, the US-China trade tensions continue to weigh on the region’s carriers. Freight demand between Asia and North America have fallen by almost 5% in year-on-year terms.

European airlines posted a 2.0% decrease in freight demand in July 2019 compared to the same period a year earlier. Weaker manufacturing conditions for exporters in Germany, heightened recession fears, and ongoing uncertainty over Brexit have impacted the recent performance.

Middle Eastern airlines’ freight volumes decreased 5.5% in July 2019 compared to the year-ago period. This was the sharpest drop in freight demand of any region. Escalating trade tensions, the slowing in global trade and airline restructuring have impacted the recent performance.

Latin American airlines experienced an increase in freight demand growth in July 2019 of 3.0% compared to the same period last year. The recovery of the Brazilian economy, to avoid a recession, was a positive development; however, concerns regarding the outlook for some key Latin American countries including Argentina remain.

African carriers posted the fastest growth of any region in July 2019, with an increase in demand of 10.9% compared to the same period a year earlier. This continues the upwards trend in demand that has been evident since mid-2018 and makes Africa the strongest performer for the sixth consecutive month. Strong trade and investment linkages with Asia have underpinned a double-digit increase in air freight volumes between the two regions over the past year.

Photo: Sergey Kustov

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