Airfreight demand picks up but prospects look bleak

Air cargo demand picked up in April but IATA is downbeat in its expectations for the months ahead.
The latest figures from the airline organisation show a 3.2% year-on-year improvement in air cargo demand in April led by growth in the Middle East and Latin America, with increases of 7.7% and 6.8% respectively.
However, IATA said that that growth appeared to be stronger than in preceeding months of 2016 because of the disappearance of the distorting factor related to the 2015 industrial action at US west coast seaports which created a surge in airfreight demand.
The organisation also warned that due to weak world trade, air cargo demand remained soft and lagged behind the relatively robust passenger side of the business.
The first quarter of 2016 saw the first annual decline in trade volumes since the global financial crisis in 2009, and the World Trade Organization (WTO) predicts only sluggish growth for the remainder of 2016.
“While the April uptick in demand growth for air cargo is encouraging, the overall economic environment is not. The decline in global trade does not bode well for air cargo markets in the months ahead,” said IATA’s director general and chief executive Tony Tyler.
Yields also came under pressure during the month, IATA said, as the industry-wide load factor of 43.5% was 1.4 percentage points lower than the same month last year.
Looking at regional performance, Asia-Pacific airlines registered a 0.1% demand increase in April compared to last year, while capacity expanded 2.8%.
“The largest factor impacting this stagnation is weak trade—globally and in the region,” IATA said.
North American carriers experienced an upward swing in year-on-year performance as “the exaggerated effects of last year’s US seaport disruption wore off”.
Demand grew by 4% in April 2016 compared to the same period last year, better that the 0.8% drop the previous month.
European airlines witnessed a 6.8% increase in freight volumes in April 2016, the highest growth since November 2013.
“The strong European performance corresponds with an increase in export orders in Germany over the last few months,” IATA said.
“Despite European cargo demand trending upwards, performance remains weak in historical terms. Seasonally adjusted demand in April 2016 was only 1.5% higher than mid-2011.”
Middle Eastern carriers saw demand expand by 7.7% but capacity was up 11% in April. The April growth rate was about half that recorded in April 2015.
“This reflects both a slowdown in network expansion by the region’s main carriers over the past six months and weak trading conditions,” IATA said.
Latin American airlines reported a decline in demand of 5.9% and a drop in capacity of 0.7%, as economic conditions continued to worsen, particularly in the region’s largest economy, Brazil.
African carriers saw no growth in April 2016 compared to the same period last year.
“Notably, on the back of long-haul expansion, the capacity for African airlines surged by 24.3% year-on-year. This is more than double the pace of any other region in recent months.”

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