There are indications that at, least two emerging factors could negatively impact demand for air cargo in the coming months, the International Air Transport Association (IATA) has said.
The global airlines’ body identified the factors as business confidence which has been declining since mid-2014 and export orders which tailed-off towards the end of the year and a reversal of the positive trade-to-domestic production ratio which boosted cargo volumes last year.
“January was a disappointing start to the year for air cargo. And it is difficult to be too optimistic about the rest of the year given the economic headwinds in Europe and growing concerns over the Chinese economy. Add to that, the continuing trends of on-shoring production and trade protectionism and 2015 is shaping up to be another tough year for air cargo,” Tony Tyler, IATA’s director General said.
Meanwhile, the data released for global air freight markets showed a 3.2 percent expansion in freight tonne kilometres (FTKs) in January 2015 compared to the same month last year. The growth is slower than the average of 4.5 percent recorded for 2014.
There was much regional variation in the January performance. Asia-Pacific, African and Middle Eastern airlines expanded strongly, but airlines in Europe and North and Latin America all reported demand contractions.
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Asia-Pacific carriers grew their FTKs 6.9 percent compared to January 2014, supported by an improvement in regional import activity while Japan’s expansion is helping regional volumes, but there could be concerns over the Chinese economy, which saw export orders contracting at the fastest pace in three years.
‘’Underlying trends for North American volumes are positive. Trade is growing and the month-to-month comparison of FTKs shows expansion in January compared to December.
“Capacity fell 2.8 percent, continuing the recent trend of improving load factor. Middle Eastern carriers expanded FTKs 9.2 percent, while the hub strategies of the leading airlines in the region are proving successful as network and capacity expansions help satisfy demand on international routes and serve inward trade to Middle Eastern economies. Capacity jumped 18.1 percent,” the data shows further.
It added further that Latin American airlines suffered a 6.4 percent fall in FTKs compared to January 2014 adding that the region continues to be affected by the weakness in the key economies of Brazil and Argentina.
‘’Although other Latin American markets have increased regional trade in recent months, this has not yet translated into increased air freight demand. Capacity fell 2.0percent,” Tyler said in the report.
African airlines grew cargo volumes 5.2 percent while major economies such as Nigeria and South Africa are under-performing regional trade activity is holding up.
Meanwhile, the World Cargo Symposium will gather leaders from across the cargo value chain in Shanghai, China, from 10-12 March.
Speaking on the event, Tyler said: “The global air cargo industry continues to face challenges. While vulnerability to the economic cycles is beyond the control of any business sector, it is clear that the air cargo industry needs to do a better job of improving its value proposition.”
Shippers rightly demand modern processes. Taking e-air waybill penetration above 22 percent in 2014 was a strong signal that the e-cargo revolution is finally taking shape.
This year’s World Cargo Symposium is an opportunity for the entire industry to sharpen further its focus on innovation and efficiency, IATA represents some 250 airlines comprising 84 percent of global air traffic.
Sade Williams
