Air cargo demand continues to grow but yields to remain under pressure

Airfreight demand continued to show an improvement in January, but is wasn’t enough to stop load factors  declining and therefore yields are likely to remain under pressure.
The latest figures from IATA show that demand in January increased by 2.7% year on year, which continues the improvements witnessed towards the end of 2015. It is also the fastest pace of growth recorded since April last year.
However, it wasn’t all good news for air cargo carriers as capacity increased by the larger amount of 7% resulting in a 1.8 percentage point decline in load factors to 41.3%.

This indicates that “yields are likely to come under further pressure”, IATA said.
IATA director general and chief executive Tony Tyler used the monthly supply and demand round-up as an opportunity to espouse the virtues of air cargo, ahead of the World Cargo Symposium, which takes place next week in Berlin.
"It is good news that volumes are growing, but yields and revenues are still under tremendous pressure,” he said.
“Air cargo plays a vital role in our globalised and fast-paced world in which trade is the foundation for long-term prosperity. Removing barriers to trade is a win-win.
“It will shore-up the foundations for stronger economies. And an improved business environment for air cargo will help facilitate much needed technology and process investments so that the industry will be an even stronger catalyst for growth and development.
“A third of the value of goods traded internationally are delivered by air. But the value of air cargo goes much deeper in the prosperity that it creates in supporting jobs and economic opportunity.”
In February, Tyler told the air cargo industry it must adjust to the new normal of lower growth.
Breaking the results down regionally, African and South American airlines had a tough start to the year. European, Asia Pacific, Middle Easter and North American carriers all recorded demand increases.
Regional Analysis in Detail   

  • African airlines’ freight tonne kms (FTKs) declined by 1.4% in January compared to January 2015, and the freight load factor (FLF) was 22.6%, down 4.8 percentage points, and the lowest of any region. The largest economies in the region, Nigeria and South Africa, are heavily dependent on energy industries and have been hit hard by the slump in global commodity prices.
  • Asia-Pacific carriers, which comprise almost 39% of all air freight, expanded by 1.3% year-over-year (although the international freight figure was a much lower 0.2%). The FLF fell 2.3 percentage points to 49.8%, still the highest of any region. Emerging Asia trade contracted in the second half of 2015 and in general trade to and from Asia-Pacific is weak.
  • European airlines’ demand grew by 2.5% in January but the FLF fell 1.5 percentage points, to 41.6%. Growth may have been flattered by the volatility and weakness seen a year ago. The growth trend for volumes looks weak for the months ahead, so there is a strong possibility that Europe could slip back into negative growth.
  • Latin American carriers continued the weak performance of recent months, declining by 3.6%. The FLF fell 2.7 percentage points, down to 32.9%. Brazil, the region’s largest economy, has struggled, particularly with the fall in the price of oil and other commodities.
  • Middle Eastern carriers resumed their strong growth trend, expanding 8.8% in January. The FLF was broadly stable, declining just 0.3 percentage points to 39.2%. The region’s airlines continue to enjoy strong growth, helped by large-scale network and fleet expansion.
  • North American airlines saw FTKs expand 2.5% in January compared to January 2015. The FLF was 34.6%, a fall of 1.4 percentage points. Following the spike in volumes due to last year’s West Coast ports strike, air freight from the US across the Pacific fell away. On the other hand trade with Europe, particularly imports, has increased.
Share this story

Related Topics

Latest bellyhold airline news

Etihad Cargo positive about new Guangzhou flights

By Damian Brett

Etihad Cargo is hoping to capitalise on the addition of new passenger flights to China in October. The two weekly…

Read More

Share this story

BA flight cancellations won’t impact air cargo, says IAG Cargo

By Rebecca Jeffrey

IAG Cargo, the cargo division of British Airways’ (BA) parent company International Airlines Group (IAG), has said BA’s recent decision…

Read More

Share this story

Air Cargo News Awards: Last day to vote!

By Rebecca Jeffrey

Calling all airline cargo customers: This is the last day possible to to cast a vote for your favourite cargo…

Read More

Share this story