Trade Turbulence Brings Global Air Freight Demand to Three-Year Low

Date: Friday, April 5, 2019
Source: Sourcing Journal

Demand for global air freight dropped to the lowest in the last three years in February, according to the monthly update from the International Air Transport Association (IATA).

Global air freight demand fell 4.7 percent in February from a year earlier–the fourth consecutive month of negative year-on-year growth, IATA said. Freight capacity rose 2.7 percent year-on-year, marking the 12th month in a row that capacity growth outstripped demand growth.

Cargo is in the doldrums, with smaller volumes being shipped over the last four months than a year ago,” Alexandre de Juniac, IATA’s director general and CEO, said, adding, “And with order books weakening, consumer confidence deteriorating and trade tensions hanging over the industry, it is difficult to see an early turnaround.”

De Juniac said the industry is adapting to new markets for e-commerce and special cargo shipments, but the bigger challenge is the slowdown in trade.

“Governments need to realize the damage being done by protectionist measures,” he said. “Nobody wins a trade war. We all do better when borders are open to people and to trade.”

All regions except Latin America reported contraction in year-on-year demand growth in February. Asia-Pacific airlines saw air freight demand fall 11.6 percent in the month compared to the time in 2018.

“Weaker manufacturing conditions for exporters in the region, ongoing trade tensions and a slowing of the Chinese economy impacted the market,” IATA said.

North American airlines saw demand dip 0.7 percent in February year-to-year, the first month of negative year-on-year growth recorded since mid-2016, reflecting the sharp fall in trade with China. IATA said, “North American carriers have benefited from the strength of the U.S. economy and consumer spending over the past year.”

European airlines experienced a 1 percent decline in freight demand from a year earlier, which IATA said was “consistent with weaker manufacturing conditions for exporters in Germany, one of Europe’s major economies,” with “trade tensions and uncertainty over Brexit also contributed to a weakening in demand.”

Latin American airlines posted the fastest growth of any region, with demand up 2.8 percent. Seasonally-adjusted international freight demand achieved growth for the first time in six months, according to the report.

Middle Eastern airlines’ freight volumes contracted 1.6 percent in February year over year, as a downward trend in air cargo demand drive by a weakening of bilateral trade with North America contributing to the decrease.

African carriers saw freight demand fall 8.5 percent in the month. IATA said while international freight volumes are lower than their peak in mid-2017, they are still 25 percent higher than their most recent trough in late-2015.

 

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