International Air Transport Association (IATA) released data for global air freight markets showing that demand, measured in freight ton kilometres (FTKs), rose 2.7 percent in June 2018, compared with the same period the year before.
This continues the slowdown in air cargo growth that began earlier in 2018. Growth for the first half of 2018 stands at 4.7 percent, less than half the growth rate in 2017.
Freight capacity, measured in available freight ton kilometres (AFTKs), rose by 4.1 percent in June 2018. Capacity growth has now outstripped demand growth in every month since March.
The restocking cycle, during which businesses rapidly built up inventories to meet demand, ended in early 2018. There was a marked fall in air cargo volumes from March.
There is now a structural slowdown in global trading conditions as indicated by the fall in the Purchasing Managers Index (PMI) to its lowest level since 2016. Factory export order books have turned negative in China, Japan and the US.
The temporary grounding of the Nippon Cargo Airlines fleet in the second half of June exaggerated the slowdown by shaving up to 0.5 percentage points off June growth.
“Air cargo continues to be a difficult business with downside risks mounting. We still expect about 4 percent growth over the course of the year. But the deterioration in world trade is a real concern.
“While air cargo is somewhat insulated from the current round of rising tariff barriers, an escalation of trade tension resulting in a ‘re-shoring’ of production and consolidation of global supply chains would change the outlook significantly for the worse. Trade wars never produce winners. Governments must remember that prosperity comes from boosting their trade, not barricading economies,” Alexandre de Juniac, IATA’s director-general/CEO, said.
All regions except Africa reported a year-on-year increase in freight volumes in June 2018, but the slow growth in Asia-Pacific, which accounts for nearly 37 percent of the entire air cargo market, dragged the global growth rate down.
African carriers saw freight demand contract 8.5 percet in June 2018 compared with the same month last year. Capacity also fell by 1.4 percent. It is difficult to be positive about the current picture in Africa.
International FTKs fell at the fastest pace (-8.6%) for nearly nine years. Although the year-on-year growth rate for the first half of 2018 was 3.0%, in seasonally-adjusted terms, FTKs are trending downward at an annualised rate of almost 20% over the past six months, and demand conditions are weak on all the main markets to and from the continent.
