IATA the latest to report improving airfreight market but warns trade remains weak

IATA is the latest organisation to report an improvement in air cargo demand in September but has warned the improvement is partly down to one-off factors and that trade indicators remain weak.
The airline organisation said that in September air cargo demand in freight tonne km terms improved by 6.1% year on year, which it said was the fastest pace of growth since February 2015 when there was a boost as a result of strikes at US west coast seaports.
IATA said that the improved figures coincided with an apparent turnaround in new export orders in recent months, while the rush replacement of Samsung Galaxy Note 7 devices and the collapse of shipping line Hanjin may also have contributed.
Airfreight capacity increased by the lower amount of 4.7% during the month and as result load factors improved by 0.6 percentage points on last year to 43.7%.
"Demand for air cargo strengthened in September,” said IATA’s director general and chief executive Alexandre de Juniac.
“Although with growth in world trade virtually at a standstill, the air cargo sector still faces some major hurdles.
“We did have some encouraging news. The conclusion of the EU-Canada Free Trade Agreement is good news for the economies involved and for air cargo.
“Growth is the way to overcome the world’s current economic challenges. The EU-Canada agreement is a welcome respite from the current protectionist rhetoric and positive results should soon be evident.
“Governments everywhere should take note and move in the same direction."
Looking at the individual regions, Asia-Pacific airlines saw freight volumes increase by 5.5% in September 2016 compared to the same period last year.
“Capacity in the region expanded 3.4%,” IATA said.”The positive Asia-Pacific performance corresponds with signs of an increase in export orders in China and Japan over the last few months. Seasonally-adjusted freight results for Asia-Pacific carriers are now trending upwards.”
European airlines experienced a 12.6% increase in freight volumes during the month while capacity increased 6.4%.
The strong European performance corresponds with an increase in reported new export orders in Germany over the last few months.
North American carriers saw freight volumes expand 4.5% year on year, as capacity increased 2.6%.
International freight volumes grew by 6.2% – their fastest pace since the US seaports disruption boosted demand in February 2015.
“However, in seasonally-adjusted terms volumes are still just below the level seen in January 2015. The strength of the US dollar continues to keep the US export market under pressure,” IATA said.
For Middle Eastern carriers the month saw demand growth slow for the third consecutive month to 1.2% – the slowest pace since July 2009.
IATA said that seasonally-adjusted freight growth, which had been trending upwards until the past year or so year, has now halted.
This turnaround in performance is partly due to weaker conditions in the Middle East to Asia and Middle East to North America markets.  
Latin American airlines continued their poor run of form as demand declined by 4.5%.
“The ‘within South America’ market has been the weakest performing market so far this year with volumes contracting 14% year-on-year in August, the most recent month for which route specific data are available.
“The comparative strength of the US economy has helped boost volumes between North and South America with US imports by air from Colombia and Brazil increasing by 5% and 13% year-on-year respectively.”
Finally, African carriers saw freight demand increase by 12.7% in compared with the same month last year – the fastest rate in nearly two years.
But capacity surged year-on-year by 34% on the back of long-haul expansion in particular by Ethiopian Airlines and North African carriers.
Yesterday, analyst WorldACD said cargo demand in weight terms had improved by 5% in September.
“With such an increase in total weight transported, a further worldwide yield improvement over previous months, and industry sources claiming that October will be even better, one could be forgiven for thinking that the industry shows signs of improving health,” the analyst said.
At the recent Air Cargo Forum there was much speculation as to what had caused the improvements.
Robert van de Weg, senior vice president of sales & marketing, Volga-Dnepr Group, suggested that as well as a general demand improvement, the increase could be to do with shipper outlook earlier in the year.
He suggested that because there was so much free capacity earlier in the year and airfreight rates were so low, shippers were in no rush to ship products early to avoid a capacity crunch later in 2016.
As a result, they had left it later in the year to get their supply chains moving for the Christmas period, which had resulted in a boost for air cargo.
He added that there could also be some inventory re-stocking and a positive impact from the Hanjin collapse, a view reflected by Hactl’s Mark Whitehead.

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