Air freight market growth slows  in June over falling trade activity

Consistent falling trade activity and weaker than expected growth in several regions have been attributed to the low demand for air cargo globally.

In a data on global air freight markets recently released by the International Air Transport Association (IATA),  there is decline in growth for air cargo demand in June.

The data shows that  Air freight volumes measured in Freight Tonne Kilometers (FTK) rose just 1.2 percent compared to a year ago.

Asia-Pacific, North American and Latin American carriers reported year-on-year declines (-0.3 percent, -3.3 percent, and -1.6 percent respectively) while European carriers reported that markets were flat.

“This was offset by the strong performance of Middle Eastern (+15.3 percent) and African (+6.7 percent) carriers to keep growth in positive territory. The general trend of a weaker 2015 compared to 2014 can be seen in the half-year data. Air freight markets expanded by 5.8 percent in 2014, however year-to-date growth for 2015 stands at 3.5 percent.

“The half-year report for air cargo is not encouraging. With growth of just 1.2 percent over June last year, markets are basically stagnating. Some carriers are doing better than others at picking up the business that is out there. But overall it has been a disappointing first half of 2015, especially considering the strong finish to 2014. The remainder of the year holds mixed signals. The general expectation is for an acceleration of economic growth, but business confidence and export orders look weak. Air cargo and the global economy will all benefit if governments can successfully focus on stabilising growth and stimulating trade by removing barriers,” Tony Tyler, IATA’s Director General said.

African carriers, according to the report, experienced growth in demand of 6.7 percent, and capacity rose by the same amount.

IATA added that Nigerian and South African economies have underperformed for much of the year so far, however regional trade has held up. Demand growth for the first six months was 4.8 percent.

Asia-Pacific carriers saw a fall in FTKs of 0.3 percent in June compared to June 2014, and capacity expanded 4.0  percent. The region has experienced a notable slowdown in imports and exports over recent months, and latest data shows emerging Asia trade activity down 8 percent.

In addition to generally weak trade growth, the region is the most exposed to the China market where government policies are more focused on stimulating domestic markets.

Meanwhile, European carriers reported flat demand in June (0.0 percent ), compared to a year ago and capacity rose 2.2 percent.

Improvements in Eurozone business confidence, according to IATA,  have not led to increased air freight demand, and consumer confidence has been hit by the Greek crisis. Growth for the year-to-date was -0.6 percent.

North American airlines experienced a decline of 3.3 percent year-on-year and capacity grew 2.8 percent. The positive impact of a modal shift to air as a result of the West Coast ports strike has faded and economic performance, despite some improvement in the second quarter, is subdued. Growth for the first six months of the year was -0.4 percent.

‘’Although some major economies in the region have seen slowdowns in non-oil sectors, economic growth remains generally robust, which is also helping to sustain demand for air freight. Growth for the year-to-date is running at 14 percent . Regional trade activity has grown in the first half of 2015, despite continuing weakness in Brazil and Argentina.

Unfortunately this has not translated into stronger demand for air freight. Growth for the year-to-date was -6.9 percent”, Tyler added.