Investment cycle boosts air cargo demand in October

Airfreight growth improved in October as a pick up in the investment cycle helped boost demand.
The latest figures from IATA show that freight tonne kms increased by 3.1% year on year in October, which is an improvement compared with the 29-month low of 2.5% recorded in September.
The airline association said that growing international e-commerce and an upturn in the global investment cycle are supporting the growth.
However, IATA added that demand was being negatively affected by a contraction in export order books in major exporting nations; longer supplier delivery times in Asia and Europe and weakened consumer confidence.
Analyst WorldACD also noted an improvement in air cargo volume growth during the month. In September it recorded a decline whereas there was an improvement of 2% in October.
The analyst reasoned that demand was boosted by US businesses stocking up before the implementation of increased tariffs (since delayed) and also seafood traffic between South America and Asia Pacific.
WorldACD said that three regions recorded an improvement in both imports and exports – Asia Pacific was the best performing region in October with export growth of 4.2% and imports of 2.7%, for Europe, the corresponding percentages were 0.5% and 2.7% and for Middle East and South Asia there was an improvement of 3.4% and 0.1%.
IATA’s director general and chief executive Alexandre de Juniac said: “Cargo is a tough business, but we can be cautiously optimistic as we approach the end of 2018. Slow but steady growth continues despite trade tensions.
“The growth of e-commerce is more than making up for sluggishness in more traditional markets. And yields are strengthening in the traditionally busy fourth quarter.
“We must be conscious of the economic headwinds, but the industry looks set to bring the year to a close on a positive note.”
While the improvement in demand growth is good news for the industry, this was tempered by load factors declining by 1.1 percentage points on last year to 50.4%.
IATA said October was the eighth month in a row that capacity growth has outstripped demand improvements.
Looking at regional demand, Asia-Pacific airlines saw demand grow by 1.9% in October and capacity was up 4.2%.
Weaker manufacturing conditions for exporters, and longer supplier delivery times particularly in China and Korea hit demand.
North American airlines posted the fastest growth of any region with an increase in demand of 6.6% year on year and capacity increased by 8.2%.
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 1.4% increase and capacity increased by 1.9%.
“Weaker manufacturing conditions for exporters, and longer supplier delivery times impacted demand,” the association pointed out.
Middle Eastern airlines’ freight volumes expanded 5% in October as there are signs of a pick-up in seasonally-adjusted international air cargo demand helped by more trade to/from Europe and Asia. 
Latin American airlines’ freight demand rose 0.3% in October and capacity increased by 3.3%. Finally, African carriers saw freight demand decrease by 4.2%. This was the seventh time in eight months that demand shrank.
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