Yield recovery maintains momentum, says IATA
01 / 11 / 2017
Airfreight growth was pegged back to 9.2% in September, its slowest rate for five months, but is still outstripping the increase in capacity said IATA in its latest monthly forecast.
However, growth in demand (in freight tonne kilometres, FTKs) was still significantly higher than the five-year average of 4.4%, it added.
Freight capacity (available freight tonne kilometres, AFTKs), rose 3.9% compared with September last year. This is less than half the pace of demand growth, suggesting that the trend towards higher load factors and yields, seen by IATA in its previous monthly report, is continuing.
However, the airfreight industry seems to have passed a cyclical growth peak. The upward trend in seasonally-adjusted freight volumes in the third quarter of 2017 has eased and the inventory-to-sales ratio in the US is flat, IATA points out — suggesting that the period when companies look to restock inventories quickly, giving air cargo a boost, has ended.
With year-to-date demand growth of 10.1%, well ahead of IATA’s forecast of 7.5% growth in air freight demand for 2017, there appears to be significant upside potential even if the peak of the economic cycle has passed, it said.
IATA director general and chief executive, Alexandre de Juniac, also warned that the industry should continue to strive for improvement, saying: "Demand for air cargo grew by 9.2% in September.
"While that’s slower than in previous months, it remains stronger than anything we have seen in recent memory. But there are signs that this demand spurt may have peaked. So it becomes even more important to reinforce the industry’s competitiveness by accelerating the modernisation of its many antiquated processes."
Airlines in all regions saw increases in year-on-year demand in September. Asia-Pacific carriers’ freight volumes increased 9.3% in September compared to the same month last year. Capacity expanded by only 5.3% and demand growth was strong on all the major routes to, from and within the region, with manufacturers reporting strong export order books.
In North America, carriers freight volumes increased 7.4% for the month but capacity increased by just 1.4%. The strong US dollar boosted inbound freight with US Census Bureau data showing a 12.0% increase in air imports to the US in the first seven months of 2017, but a slower rise in export orders of 6.6%.
However, there are signs that the decline in the US dollar since the start of the year is beginning to rebalance trade flows, says IATA. In August 2017, the most recent month for which data are available, air exports grew 12.7% while imports grew 7.4%.
In Europe, airlines posted a 10.3% increase in demand in September 2017, and a capacity increase of 5.6%, with the recent strengthening of the euro seemingly having little effect on exports.
In fact, German manufacturers’ export orders are growing at their fastest in more than seven years. Freight demand is strongest on European routes to and from Asia – which have benefited from China’s economic stimulus measures – and across the Atlantic.
Middle Eastern carriers’ year-on-year freight volumes increased 8.9% with capacity trailing at 2.6%. Demand however was slower than the previous month; a short-lived weak patch in the third quarter of 2016 making for volatility in the year-on-year growth rate in recent months.
Seasonally-adjusted international freight volumes, however, have continued to trend upwards at 8% over the past six months. Still, strong competition, particularly on Asia-Europe, means that Middle East carriers are not seeing as healthy a pickup in the seasonally-adjusted traffic trend as other airlines in other regions.
Latin American airlines saw demand grow 7.6% in September and capacity increase by 5.9% compared to September 2016. International freight volumes rose by 8.6%, well above the five-year average rate of 0.1%, reflecting signs of economic recovery in the largest economy, Brazil. Seasonally-adjusted international freight volumes are now back to late-2014 levels.
African carriers posted the largest year-on-year increase in freight volume of all regions at 17.7%. Although this is in fact a slowdown from August it is still more than twice the five-year average pace of 8.9%. Capacity increased by only 2.6%. Demand was boosted by a 67% surge in trade to and from Asia in the first eight months of the year. However the upward trend in seasonally-adjusted volumes has flattened in recent months.