Air cargo demand growth slows while capacity additions continue

Air cargo capacity increases outstripped demand growth for the fourth month in a row in May, with traffic expected to grow at a slower pace for the rest of 2018.
The latest figures from IATA show that freight tonne kms (FTKs) increased by 4.2% year on year in May, compared with a 5.3% increase during the first five months.
Meanwhile, load factors for the month declined to 44.6% compared with 45.5% in May 2017 as supply additions outstripped demand growth.
This slowdown is reflected in the organisation’s mid-year forecast, with its growth prediction for 2018 reduced to 4% compared with the 4.5% prediction made at the start of the year.
IATA said there are three indications that cargo traffic will grow at a slower pace this year: the end of a re-stocking cycle, the new export orders component of the of the purchasing management index being at a 21-month low and global trade appears to softening in light of incoming protectionist tariffs.
IATA’s director general and chief executive Alexandre de Juniac said: "We expect air cargo demand to grow by a modest 4.0% in 2018. That’s an uptick from a very weak start to the year.
“But headwinds are strengthening with growing friction among governments on trade. We still expect demand to grow, but those expectations are dampened with each new tariff introduced. Experience tells us that trade wars, in the long run, only produce losers.”
Looking at regional performance, Asia-Pacific airlines saw freight demand increase in May by 4.9% compared to the same period last year and capacity increased by 7.4%.
“As the largest freight-flying region, carrying close to 37% of global airfreight, the risks from protectionist measures impacting the region are disproportionately high,” IATA said “That said, there are signs that demand is accelerating for international FTK’s.”
North American airlines’ freight volumes expanded 5.9% in May compared to the same period a year earlier. This was an increase in demand from the 4.6% rate of growth recorded the previous month.
According to IATA, the recent momentum of the US economy and the US dollar has helped strengthen demand for air imports.
European airlines posted a 2.3% increase in freight volumes in 2018, which was a slowdown from the 3.5% rate of growth the previous month, and capacity increased 6%.
Middle Eastern carriers saw freight volumes grew 2.4% in May.
IATA said: “This was a significant deceleration in demand [growth] of over 6.9% the previous month. The decrease mainly reflects developments from a year ago rather than a substantive change in the current freight trend.”
Latin American airlines experienced growth in demand of 11.4% in May, which is the largest increase of any region for the third consecutive month, and capacity increased by 1.5%.
IATA said the pick-up in demand over the last 18 months comes alongside signs of economic recovery in the region’s largest economy, Brazil.
Finally, African carriers saw freight demand contract 2% compared to the same month last year and capacity increased by 20.4%.
After a surge in international FTK volumes last year, demand growth has slowed. This mainly reflects a softening in demand on markets to/from Asia and the Middle East.
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