IATA: Softening demand in Q4 pulls down airfreight performance in 2018
06 / 02 / 2019
The air cargo industry saw traffic increase by 3.5% in freight tonne km (FTK) terms last year as a softening in demand growth during the peak season dragged down performance.
IATA statistics show that the year was capped by a 0.5% decrease in FTKs in December, which was outstripped by freight capacity additions of 3.8%.
Analyst WorldACD last week reported growth for the year of 3.7% in weight terms, with December registering a decline of 3.5%. It said yields for the month had also decreased compared with a year earlier.
IATA said there were several reasons for the weaker performance as the year progressed. It pointed out that the restocking cycle, during which businesses rapidly build up inventories to meet demand, ended in early 2018, while global economic activity has weakened.
Also, the export order books of all major exporting nations, with the exception of the US, contracted in the second half of 2018 and consumer confidence weakened compared to very high levels recorded at the beginning of 2018.
The organisation has predicted growth of 3.7% for 2019, but in its latest market wrap-up warned of considerable downside risk.
IATA director general and chief executive Alexandre de Juniac said: "Air cargo demand lost momentum towards the end of 2018 in the face of weakening global trade, sagging consumer confidence and geopolitical headwinds. Still, demand grew by 3.5% compared to 2017.
"We are cautiously optimistic that demand will grow in the region of 3.7% in 2019. But with the persistence of trade tensions and protectionist actions by some governments there is significant downside risk. Keeping borders open to people and to trade is critical.
“To attract demand in new market segments, the air cargo industry must improve its value proposition. Enabling modern processes with digitalisation will help build a stronger foothold in e-commerce and the transport of time- and temperature-sensitive goods such as pharmaceuticals and perishables.”
Looking at regional performance, Asia-Pacific carriers posted the weakest growth of any region in December with a decrease in demand of 4.5%, while for the year there was a 1.7% increase.
"The weaker performance of Asia-Pacific carriers in 2018 largely reflects a slowing in demand for exports from the region’s major exporters (China, Japan and Korea)," IATA said.
"Signs of a moderation in economic activity in China and an escalation of trade tensions continue to pose a downside risk to air cargo in Asia-Pacific."
North American airlines posted the fastest growth of any region for the seventh consecutive month in December thanks to the strength of the US economy. The region’s airlines reported an increase in demand of 2.9%, while annual growth stood at 6.8%.
European airlines posted a 1.9% year-on-year increase in December, while for the year there was a 3.2% improvement.
"Weaker manufacturing conditions for exporters, particularly in Germany, one of Europe’s key export markets, along with mixed economic indicators impacted demand in 2018," IATA said.
Middle Eastern carriers’ freight volumes increased 0.1% year on year in December and the annual increase came in at 3.9%.
"The region continues to be affected by geopolitical issues," IATA said.
Latin American airlines experienced a decrease in year-on-year demand of 0.1% in December after three months of positive growth. Annual growth in freight demand among Latin America carriers in 2018 increased by 5.8%.
African carriers’ saw freight demand decrease by 2.2% in December 2018 and the annual growth in freight demand in 2018 decreased by 1.3%.
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