Global Air Freight Demand Sees Lift in March but Headwinds Persist
Date: Monday, May 20, 2019
Source: Sourcing Journal
Global air freight demand increased 0.1 percent in March compared to the same period in 2018, marking a significant improvement on the seasonally adjusted 4.9 percent decline in February, according to the monthly report from the International Air Transport Association (IATA).
However, IATA noted that air freight demand, measured in freight ton kilometers, was still down 1.5 percent in March from a year earlier. Freight capacity rose 3.1 percent year-on-year in March. IATA said capacity growth has now outstripped demand growth for 11 out of the past 12 months.
IATA, which represents some 290 airlines accounting for 82 percent of global air traffic, said demand for air cargo continues to face challenges. These include a 1 percent falloff in global trade volume over the past year and a weakening of global economic activity and consumer confidence.
In addition, the export order component of the global manufacturers’ Purchasing Managers Index has indicated falling global export orders since September. On a positive note, industry confidence remains somewhat upbeat, with only 13 percent of respondents from IATA’s Business Confidence Survey expecting to see a decrease in freight volumes in 2019 compared to 2018.
Alexandre de Juniac, IATA’s director general and CEO, said the uptick in March demand was “an encouraging development” following four consecutive months of contraction.
“But the headwinds from weakening global trade, growing trade tensions and shrinking order books have not gone away,” he said.
All regions except Asia-Pacific reported year-on-year demand growth in March. Asia-Pacific airlines saw demand for air freight drop 3.4 percent in March, which IATA noted was a significant improvement from the 12 percent decline in the previous month.
“Weaker manufacturing conditions for exporters in the region, ongoing trade tensions and a slowing of the Chinese economy impacted the market,” the report said.
North American airlines saw demand increase 0.4 percent in March, which was below recent growth levels. IATA said, “The recent easing of growth is partly due to a slowing of U.S. domestic economic activity in the later part of 2018 and falling global trade volumes. Despite this, new export orders are rising, which would support air cargo growth.”
European airlines posted a 3.6 percent lift in freight demand in March from the year-ago period. The report said, “Given the weaker manufacturing conditions for exporters in Germany and uncertainty over Brexit, March’s performance represents a positive outcome.”
Middle Eastern airlines’ freight volumes rose 1.3 percent in year to year in March. IATA noted that weakening air freight volumes to and from North America and Asia Pacific contributed to a soft performance.
Latin American airlines experienced an increase in freight demand growth in March of 3.6 percent from the year-ago period. IATA said the emergence of the Brazilian economy from a recession is supporting a resurgence in air cargo demand. However, ongoing economic and political uncertainties in various parts of the region continue to present challenges for the industry.
African carriers posted the fastest growth of any region in the month, with a gain in demand of 6 percent compared to the same period a year earlier. IATA noted that global freight volumes for the region are lower than their peak in mid-2017, but are still around 30 percent higher than their most recent trough in late 2015.