Trade Tensions Grounded Air Freight Growth in November
Date: Wednesday, January 9, 2019
Source: Sourcing Journal
Global air freight demand was flat in November compared a year earlier–the slowest rate of growth since March 2016–following 31 consecutive months of year-on-year increases, the International Air Transport Association (IATA) said Tuesday.
Freight capacity rose 4.3 percent year-on-year in November, the ninth straight month that capacity growth outstripped demand, according to IATA. The bottom line, the organization said, was that while international e-commerce continues to grow, overall demand faces significant headwinds.
These challenges for air freight include signs of weakness in global economic activity; a contraction in export orders in all major exporting nations, except the U.S.; shorter supplier delivery times in Asia and Europe, and weakened consumer confidence compared to high levels at the beginning of 2018.
“Normally the fourth quarter is a peak season for air cargo, so essentially flat growth in November is a big disappointment,” said Alexandre de Juniac, IATA’s director general and CEO. “While our outlook is for 3.7 percent demand growth in 2019, downside risks are mounting. Trade tensions are cause for great concern. We need governments to focus on enabling growth through trade, not barricading their borders through punitive tariffs.”
While North America the Middle East and Latin America reported year-on-year demand growth in November, Asia Pacific, Europe and Africa contracted. Asia-Pacific airlines saw demand for air freight shrink 2.3 percent in November compared to the same period in 2017. This was the first time since May 2016 that monthly year-on-year demand declined. Weaker manufacturing conditions for exporters and shorter supplier delivery times, particularly in China, impacted the demand, IATA noted.
European airlines saw a 0.2 percent decline in freight demand in the month year-to-year as soft manufacturing conditions for exporters and shorter supplier delivery times particularly in Germany, one of Europe’s key export markets, hurt demand. African carriers saw freight demand decrease 7.8 percent in November from a year earlier–the eighth time in nine months that demand contracted.
On the plus side, North American airlines posted the fastest growth of any region for the second consecutive month in November with an increase of 3.1 percent compared to a year earlier.
“The strength of the U.S. economy and consumer spending have helped support the demand for air cargo over the past year, benefiting U.S. carriers,” IATA said.
Middle Eastern airlines’ freight volumes grew 1.7 percent in the month compared to November 2017. IATA said, “Seasonally-adjusted international air cargo demand has now trended upwards for the past six months, helped by stronger trade to and from Europe and Asia.”
Latin American airlines’ freight demand rose 3.1 percent in November year-to-year, as international demand recovered. However, IATA said key markets to and from the region are showing signs of weakness, particularly South America and Europe.