Why Global Air Freight Demand Continued to Descend in August

Date: Wednesday, October 16, 2019
Source: Sourcing Journal

 

As trade tensions percolated and economic growth stalled, global air freight demand dropped 3.9 percent in August compared to a year earlier, marking the 10th straight month of year-on-year declines, the International Air Transport Association (IATA) said in its monthly report.

IATA noted that this is the longest stretch of monthly volume declines in air freight since the global financial crisis in 2008. Freight capacity rose 2 percent year-on-year in August, meaning capacity growth has now outstripped demand growth for the 16th consecutive month, IATA noted.

 

“The impact of the U.S.-China trade war on air freight volumes was the clearest yet in August,” Alexandre de Juniac, IATA’s director general and CEO, said.

De Juniac said the difficult business environment for air cargo is expected to continue, as trade tensions simmer, along with weakness in some key economic indicators and rising political uncertainties around the world.

IATA noted that global trade volumes are 1 percent lower than a year ago and trade in emerging countries has been underperforming that of advanced nations throughout most of 2019. Global export orders have also been falling, as evidenced by the Purchasing Managers Index tracking of new manufacturing export orders citing falling orders since September 2018.

The IATA report showed airlines in Asia-Pacific and the Middle East suffered sharp declines in year-on-year growth in air freight volumes in August, while North America and Europe experienced more moderate decreases. Africa and Latin America both recorded growth in air freight demand compared to August 2018.

Asia-Pacific airlines saw air freight demand descend 5 percent in the period, as the U.S.-China trade war and a slowdown in the Chinese economy significantly impacted the region. The temporary shutdown of Hong Kong International Airport—the largest cargo hub in the world—added additional pressure.

IATA noted that with the Asia-Pacific region accounting for more than 35 percent of total air freight volume, this performance was the major contributor to the weak industry-wide results.

North American airlines saw demand fall 2.4 percent year to year in August, as the trade conflict and falling business confidence weighed on the region’s carriers, IATA said. Reflecting sourcing shifts, air freight demand has contracted for the largest routes between Asia and North America, where seasonally adjusted volumes are down almost 5 percent compared to August 2018.

European airlines registered a 3.3 percent decline in freight demand in the month, as weaker manufacturing conditions for exporters in Germany, softer regional economies and ongoing uncertainty over Brexit impacted activity.

Middle Eastern airlines’ freight volumes were down 6.7 percent in the month, the sharpest drop in freight demand of any region. IATA cited escalating trade tensions, the slowing in global trade and airline restructuring for negatively impacting the region’s performance since the fourth quarter of 2018.

Latin American airlines saw a 0.1 percent increase in freight demand, even as soft economic growth and political instability in some countries have impacted the region’s performance, as has recent currency volatility in the region’s key economies.

African carriers posted the fastest growth of any region in August, with an increase in demand of 8 percent compared to a year earlier.

“This continues the upwards trend…that has been evident since mid-2018 and makes Africa the strongest performer for the sixth consecutive month,” IATA added. “Strong trade and investment linkages with Asia have underpinned a double-digit increase in air freight volumes between the two regions over the past year. China recently confirmed a further $60 billion investment into the continent.”

 

Read from the original source.

 

BROWSE MORE ARTICLES

E-MAIL TO COLLEAGUE

NOTIFY ME WHEN NEW ARTICLES ARE POSTED

SOUND FAMILIAR? HAVE A SLIGHTLY DIFFERENT ISSUE? CONTACT US