Aviation
SLUMP IN AIR CARGO PERSISTS THROUGH JULY
September 6, 2019

The International Air Transport Association (IATA) has released data for global cargo traffic, measured in freight tonne kilometers (FTKs), which showed a contraction of more than 3% in July 2019 from 2018, marking the ninth consecutive month of year-on-year decline in freight volumes.

 

IATA said air cargo continues to suffer from weak global trade and the intensifying trade dispute between the US and China.

 

Global trade volumes are 1.4% lower than a year ago. Trade volumes between the US and China have also fallen by 14% year-to-date compared to the same period in 2018. 


Freight capacity, measured in available freight tonne kilometers (AFTKs), rose by 2.6% year-on-year in July 2019. Capacity growth has now outstripped demand growth for the 9th consecutive month, IATA said.

“Trade tensions are weighing heavily on the entire air cargo industry. Higher tariffs are disrupting not only transpacific supply chains but also worldwide trade lanes. While current tensions might yield short-term political gains, they could lead to long-term negative changes for consumers and the global economy. Trade generates prosperity. It is critical that the US and China work quickly to resolve their differences,” said Alexandre de Juniac, IATA's director general and CEO.

 

The global Purchasing Managers Index (PMI) also did not indicate an uptick. Its tracking of new manufacturing export orders has pointed to falling orders since September 2018. For the first time since February 2009, IATA noted that all major trading nations reported falling orders.

 

Asia-Pacific, Middle Eastern airlines led the declines

Airlines in Asia-Pacific and the Middle East suffered sharp declines in year-on-year growth in total air freight volumes in July 2019, while North America and Europe experienced more moderate declines. Africa and Latin America both recorded growth in air freight demand compared to July last year. 

 

Asia-Pacific airlines saw cargo volumes fall by 4.9% in July 2019 even as air freight capacity increased by 2.5% over the past year.  


IATA said the US-China trade war and weaker manufacturing conditions for exporters in the region have significantly impacted the market. With the region accounting for more than 35% of total FTKs, this performance is the major contributor to the weak industry-wide outcome. 

 

North American airlines saw freight demand also decrease by 2.1% in July 2019, and capacity increased by 1.6%.

 

Despite a sound economic backdrop supporting consumer spending, in the US, IATA noted that the trade tensions between the world's top two economies continue to weigh on the region’s carriers. Freight demand between Asia and North America have fallen by almost 5% in year-on-year terms. 

 

European airlines also saw a 2% decline in freight volume which was attributed ti the weak manufacturing in Germany, heightened recession fears and ongoing uncertainty over the future of the Brexit. Capacity was up by 4.2% year-on-year. 

 

For Middle East airlines, cargo volumes also fell by 5.5% in July, the sharpest drop in freight demand of any region, driven by escalating trade tensions, the slowing in global trade and airline restructuring have impacted the recent performance. 


Cargo volume up for Latin American, African carriers

Meanwhile, IATA said Latin American and African carriers saw increased in freight demand to 3% and 10.9% respectively in July over last year as capacity also grew to 2.7% and 17%.

 

"The recovery of the Brazilian economy, to avoid a recession, was a positive development; however, concerns regarding the outlook for some key Latin American countries including Argentina remain," the airline group said. 

 

"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," it added.

 

In June, IATA reported that global air freight demand dropped by 4.8%.

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