Air cargo demand at three year low in January

Air cargo suffered its worst January in three years as the industry continues to face “significant headwinds”.

Figures from IATA show that January saw airfreight traffic declined by 1.8% year on year in freight tonne km terms, which the airline association said was the worst performance in the last three years, the association said.

To make matters worse, capacity was up by 4% resulting in freight load factors declining by 2.7 percentage points to 45.1%.

Analyst WorldACD also reported a decline in January, with the weight of cargo transported down 2% on a year ago.

It pointed out that the timing of the Chinese New Year can affect comparisons, adding that perishables, high tech, pharma and live animals shipments all bucked the trend and increased in January.

IATA said that demand for air cargo continues to face significant headwinds as global economic activity and consumer confidence have weakened.

It added that the Purchasing Managers Index (PMI) for manufacturing and export orders has indicated falling global export orders since September 2018.

IATA director general and chief executive Alexandre de Juniac said: “Air cargo markets contracted in January. This is a worsening of a weakening trend that started in mid-2018.

“Unless protectionist measures and trade tensions diminish there is little prospect of a quick re-bound.”

Only two of six regions reported year-on-year demand growth in January 2019 – North America and Africa. Asia-Pacific, Europe and the Middle East all contracted, while Latin America was flat. 

Looking at regional performance, Asia-Pacific airlines saw demand for air freight shrink by 3.6% in January, while capacity increased by 4.1%.

IATA said weaker manufacturing conditions for exporters in the region, ongoing trade tensions and a slowing of the Chinese economy impacted the market. Capacity increased by 4.1%.

North American airlines posted the fastest growth of any region for the eighth consecutive month, with an increase in demand of 3.3% while capacity increased by 5%.

“The strength of the US economy and consumer spending have helped support the demand for air cargo over the past year, benefiting US carriers,” IATA said.

European airlines experienced a contraction in freight demand of 3.1% and capacity increased by 2.8% year on year.

Weaker manufacturing conditions for exporters, and shorter supplier delivery times particularly in Germany, one of Europe’s key export markets, impacted demand, IATA explained, adding that trade tensions and uncertainty over Brexit also contributed to a weakening in demand. 

Middle Eastern airlines’ freight volumes contracted 4.5% in January while capacity increased by 4.1%.

Latin American airlines’ freight demand was flat in January 2019 versus last year.

IATA said: “Despite the economic uncertainty in the region, a number of key markets are performing strongly. Freight traffic within South America and between Central and South America grew at a double-digit rate in January. And demand on routes between North and South America also performed well. Capacity decreased by 0.7%.”

Finally, African carriers saw freight demand increase by 1% in January but capacity grew 8.2%.

Seasonally-adjusted air cargo demand has now trended upwards for six months, IATA said. “While seasonally-adjusted international freight volumes are lower than their peak in mid-2017, they are still 35% higher than their most recent trough in late-2015,” the association concluded.