Air cargo supply growth outstrips demand in September

05 / 11 / 2018

Air cargo capacity additions outstripped traffic growth in September as key demand drivers continued to soften.

The latest figures from IATA show that there was a 2% increase in freight tonne kms in September, which is relatively unchanged from the previous month.

However, it is less than half the five-year average growth rate of 5.1% and lags behind a 3.7% increase over the first nine months of the year.

This is down to the end of the latest re-stocking cycle that typically sees air cargo grow at a much faster rate than trade in general as companies rush stock to market.

IATA said that other key demand drivers have also softened: “There has been a global contraction in manufacturing firms’ export order books – the first since June 2017.

“Specifically, export order books contracted in all the world’s major exporting nations in September with the exception of the US.

“Longer supplier delivery times are being reported by manufacturers in most of Asia and Europe, the top two global trading areas by volume. This typically means that they have less need for the speed afforded by airfreight.”

IATA also pointed out that September was the seventh month in a row that had seen supply outgrow demand as capacity was up by 3.2% available freight tonne kms on last year.

However, the association said that yields “appear to be holding up” as the weak growth is being supported by strong consumer confidence, a robust global investment environment and the expansion of international e-commerce.

Analyst WorldACD’s figures for the month differed to IATA’s as it registered the first year-on-year decrease in demand – of 0.9% – for the first time in two-and-a-half years.

WorldACD said this reflected current trends, the fact the month had one Sunday more and one Friday less than last year and also extreme weather systems affecting flights.

Looking at regional performance, Asia-Pacific airlines saw demand grow by 1.2% year on year in September as weaker manufacturing conditions for exporters, particularly in Japan, China and Korea and disruptions to freight operations from typhoon activity took their toll.

North American airlines’ freight volumes expanded 1.5% year on year in September – a 28-month low – and capacity increased by 4.9% over the same period.

European carriers posted a 1.5% increase in freight demand during the month and capacity increased by 0.9%.

“As with the North American slowdown, it is too soon to say if this is the start of a wider weakening in demand,” the association said.

Middle Eastern carriers’ posted the fastest growth of any region in September 2018, with an increase in demand of 6.6%. IATA said there are tentative signs of a pick-up in seasonally adjusted air cargo demand supported by more trade to/from Europe and Asia.

Latin American airlines experienced an increase in freight demand growth in September of 2.9% as some of the smaller markets within the region have seen strong growth in international freight volumes so far this year. Nevertheless, the broader pick-up in demand seen over the last 19 months has now paused, IATA said.

Finally, African carriers saw freight demand contract by 2.1% compared to the same month last year. This was the sixth time in seven months that demand contracted.

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