Air cargo returns to growth but continues to face headwinds

Airfreight returned to growth in March after three months of year-on-year declines.

IATA statistics show that air cargo demand in freight tonne km terms increased by 0.1% in March.

While this is an improvement on February’s 4.9% contraction, demand for the first quarter is 2% down on a year ago.

Meanwhile, freight capacity for the month was 3.1% up on a year ago meaning that capacity growth has now outstripped demand for 11 of the last 12 months.

IATA also pointed out that air cargo continues to face significant headwinds: global trade volumes have fallen by 1% over the past year, global economic activity and consumer confidence continue to weaken and the export order component of the manufacturers’ Purchasing Managers Index indicates further declines.

Industry confidence regarding the outlook, however remains relatively upbeat with only 13% of respondents from IATA’s Business Confidence Survey expecting to see a decrease in freight volumes in 2019 compared to 2018.

IATA’s director general and chief executive Alexandre de Juniac said: “Year-on-year demand for air freight edged back into positive territory in March with 0.1% growth.

“After four consecutive months of contraction, this is an encouraging development. But the headwinds from weakening global trade, growing trade tensions and shrinking order books have not gone away.”

While IATA showed an increase in March, WorldACD showed a 2.4% decline in terms of chargeable weight, led by the Asia Pacific region.

“Markets within Asia Pacific lost 7.6% year on year in the first quarter,” WorldACD said. “In the same period, five of the 10 markets to/from Asia Pacific also performed below the world average, notably the larger ones Asia Pacific to Europe (-4.9%), Europe to Asia Pacific (-4.3%) and North America to Asia Pacific (-4.7%).”

IATA concurred that Asia Pacific had a tough month in March as it showed airlines in the region registering a 3.4% in March.

“This was a significant improvement from the 12% decline in growth from the previous month,” IATA said. “Weaker manufacturing conditions for exporters in the region, ongoing trade tensions and a slowing of the Chinese economy impacted the market.”

North American airlines saw demand increase by 0.4% in March, with IATA stating that the recent easing of growth is partly due to a slowing of US domestic economic activity in the later part of 2018 and falling global trade volumes.

European airlines posted a 3.6% increase in freight demand in March and capacity increased by 6.4%.

“Given the weaker manufacturing conditions for exporters in Germany, and uncertainty over Brexit, March’s performance represents a positive outcome,” pointed out IATA.

Middle Eastern airlines’ freight volumes increased 1.3% during the month but a clear downward trend in seasonally-adjusted international air cargo demand is now evident with weakening air freight volumes to/from North America and to/from Asia Pacific contributing to the softer performance.   

Latin American airlines experienced an increase in freight demand of 3.6% compared to the same period last year and capacity increased by 16.9%.

IATA said the emergence of the Brazilian economy from recession is supporting a resurgence in air cargo demand.

African carriers posted the fastest growth of any region with an increase in demand of 6% compared to the same period a year earlier but capacity grew 15.2% year on year.