Robust demand growth for air cargo in July

The air cargo industry received a boost in July as there was “robust growth in demand” during the month, but IATA warns of headwinds ahead.
The latest statistics from IATA show that air cargo demand increased by 5% year on year in July, which is the fastest pace of growth in almost 18 months.
Growth was led by European airlines with demand growth of 7.2% in freight tonne km terms, while Middle Eastern airlines reported an increase of  6.7%, Asia Pacific carriers saw a 4.9% improvement and North American carriers reported a jump of 4.1%.
African airlines saw demand during the month decline by 6.8% while there was a slide of 5.6% for Latin America.
However, the airline association’s new director general and chief executive, Alexandre de Juniac, warned this improvement could have been an anomaly.
"July was a positive month for air freight — which is an all too rare occurrence,” he said. “Despite that, we must recognize that we face some strong headwinds on fundamental aspects of the business.
“Global trade growth is sluggish and business confidence is weak. And the political rhetoric on both sides of the Atlantic is not encouraging for further trade liberalization,”
While demand increased 5% during the month, capacity was up by the larger amount of 5.2% and as a result the global load factor slipped 0.1 percentage points to 41.3%.
Looking at airline performance on a regional basis, Asia-Pacific airlines reported a 4.9% increase in demand for air cargo in July compared to last year.
“In particular, growth has been driven by strong increases in the large ‘within Asia’ market in recent months, but the latest business surveys from the region paint a mixed picture. Capacity in the region expanded 2.7%,” IATA said
North American carriers saw freight volumes expand 4.1% in July 2016 compared to the same period last year, and capacity increase by 3.4%.
“International freight volumes, which grew 1.3% in July, continue to suffer from the strength of the US dollar which has kept the US export market under pressure,” the association explained.
European airlines posted the largest increase in freight demand of all regions in July, 7.2% year-on-year. Capacity increased 3.8%.
“The positive European performance corresponds with an increase in export orders in Germany over the last few months. Europe’s freight volumes have now surpassed the level reached during the airfreight rebound following the Global Financial Crisis. The only other region to achieve this is the Middle East.”
Middle Eastern carriers saw air freight demand increase by 6.7% in July 2016 year-on-year. Capacity increased by 11%.
Iata said that the region’s growth rate, while still strong, has eased to half the 14% recorded annually between 2012 and 2015. This is mainly attributable to slower freight growth between the Middle East and Asia.
Latin American airlines saw demand contract by 5.6% in July 2016 compared to the same period last year and capacity increase by 10.1%.
“The region continues to be blighted by weak economic and political conditions, particularly in the region’s largest economy, Brazil.”
Finally, African carriers recorded a 6.8% decrease in year-on-year freight demand in July 2016 – the largest decline in seven years. African airlines’ capacity surged by 31.3% on the back of long-haul expansion (from a small base).

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