Concurring with similar conclusions from analysts at Drewry and WorldACD, the International Air Transportations Association (IATA) determined that August showed some encouraging signs of recovery in the global airfreight market, although some regions remain stagnant.
Data for the month of August indicated a 3.9 percent, year-over-year, rise in demand for worldwide airfreight services, measured in freight tonne kilometers (FTKs). IATA figures provided more evidence that all airfreight markets except for Latin America are distancing themselves from a slump in early 2016 that saw air freight volumes fall by 5.6 percent, y-o-y, in February 2016 – the largest annual decline in three years.
Available freight tonne kilometers (AFTKs) rose concurrently, by 4.1 percent over the same period, maintaining downward pressure on load factors and keeping yields under pressure. But despite the fact that global trade volumes were down by 1.1 percent, y-o-y, in July and showed “no improvement on the horizon,” according to IATA’s Director General and CEO Alexandre de Juniac, air cargo seems to have demonstrated more resilience than it gets credit for.
“The current global political rhetoric in much of the world is more focused on protectionism than trade promotion” said de Juniac, echoing similar statements from the likes of UPS boss David Avney, who has publicly pushed for deals, such as the politically-toxic Trans Pacific Partnership (TPP). “Economies need to grow out of the current economic doldrums. Governments should be focused on promoting trade, not raising protectionist barriers,” Juniac added.
African carriers finally had positive numbers to report, with volume rebounding notably in August by 3.7 percent, y-o-y, the fastest growth rate in 12 months. However, with carriers on the continent ramping up rapid long-haul expansion, capacity also surged by 29.2 percent, bringing into question the profitability of the increased business.
European airlines posted the largest increase in freight demand in August, at 6.6 percent, y-o-y. Capacity increased 4.7 percent. IATA explained the region’s growth as a product of “an increase in reported new export orders in Germany over the last few months.”
North American carriers were a close second, and August seems to have also turned the corner, up 4.6 percent, y-o-y. IATA noted, however, that, “The strength of the U.S. dollar continues to keep the U.S. export market under pressure.”
Asia-Pacific airlines reported a 2.8 percent y-o-y increase in air cargo for the month, while capacity rose by 1.2 percent. International traffic continued its strong showing, with traffic up by 6.5 percent, y-o-y, in July 2016.
Middle East markets continued to cool off, registering an anemic 1.8 percent, y-o-y, growth in August 2016 in a region that has recently seen double digit gains – the slowest pace since July 2009. Capacity moved the other way, increasing by 6.9 percent, y-o-y, and sending worrying signals. IATA noted that, “the weakening performance is partly attributable to slower growth between the Middle East and Asia. This suggests that Middle Eastern carriers are facing stiff competition from European airlines on the Europe-Asia route.”
Finally, Latin America continued to disappoint, with y-o-y demand shrinking for the six consecutive month. In August, FTKs fell by 3.3 percent, y-o-y. With Brazil’s economy stuck in a protracted recession, the prospect of a change in fortunes remains distant, prompting IATA to state that, “The region continues to be blighted by weak economic and political conditions, particularly in the region’s largest economy, Brazil.”
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