Abu Dhabi, UAESaturday 19 October 2019

Demand for global air freight returns to growth

Air freight demand in Asia-Pacific contracted while Africa posted the fastest growth globally, IATA finds

Asian and Middle Eastern freight demand slowed in May amid the ongoing trade standoff between Beijng and Washington. EPA
Asian and Middle Eastern freight demand slowed in May amid the ongoing trade standoff between Beijng and Washington. EPA

Demand for global air freight inched toward growth with a 0.1 per cent increase in March year-on-year, after a four-month contraction, but faces headwinds from a weaker global economy and shrinking trade volumes.

Middle East airlines outpaced global air freight demand growth in March, the International Air Transport Association (IATA) said in a report. Regional carriers posted an increase in air freight volumes of 1.3 per cent in March compared to the prior year period though demand was outstripped by capacity growth of 3.8 per cent.

The return to growth in global air freight in March "is an encouraging development...but the headwinds from weakening global trade, growing trade tensions and shrinking order books have not gone away", Alexandre de Juniac, IATA's director general and chief executive, said.

IATA's concerns echo the International Monterary Fund's warning last month that the global economy is slowing more than expected, prompting it to cut its forecast for world economic growth this year. In its third downgrade since October, the IMF said the global economy will likely grow 3.3 per cent this year, the slowest expansion since 2016. The forecast cut 0.2 percentage points from the IMF’s outlook in January.

Global air freight's marginal growth in March is an improvement over the 4.9 per cent decline in February but in seasonally-adjusted terms, demand is still down 1.5 per cent over the past year, IATA said.

Freight capacity, measured in available freight tonne kilometers, rose 3.1 per cent in March year-on-year and outstripped demand for 11 out of the last 12 months.

All regions posted growth in air cargo demand in March year-on year except for Asia-Pacific, while Africa showed the fastest growth globally.

Asia-Pacific carriers posted a 3.4 per cent decline in March because of weaker manufacturing conditions for exporters in the region, ongoing trade tensions and a slowing of the Chinese economy. The performance in March was a "significant improvement" from the 12 per cent drop in February.

African airlines grew six per cent in March from a year ago, the fastest pace among all regions, while capacity rose 15.2 per cent.

North American carriers saw demand increase by 0.4 per cent during the month, partly due to a slowdown in US domestic economic activity at the end of 2018 and falling global trade volumes. However, a rise in new export orders could support air cargo growth.

European carriers saw a 3.6 per cent increase in freight demand, a "positive outcome", given uncertainty over Brexit and weaker manufacturing conditions for exporters in Germany, IATA said.

Airlines in Latin America posted a 3.6 per cent increase in air cargo demand as the Brazilian economy recovers from a recession. However, ongoing economic and political uncertainties in Venezuela continue to present a challenge.

The industry's confidence in the outlook for the year remains upbeat, with 13 per cent expecting to see a decrease in freight volumes in 2019 compared to last year, according to IATA’s Business Confidence Survey.

Updated: May 8, 2019 12:03 PM

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