Trade Resources Logistics & Customs IATA Has Reported a Continued Modest Improvement in Air Cargo Markets in August

IATA Has Reported a Continued Modest Improvement in Air Cargo Markets in August

The International Air Transport Association (IATA) has reported a continued modest improvement in air cargo markets in August.

August air freight demand was up 3.6% on the previous year, which is considerably better than year-to-date performance of a 0.7% expansion.

Demand for air freight began increasing slowly from April, in line with strengthening business confidence, as economic performance in Europe and the US showed signs of improvement. The Eurozone economy, for example, stabilised in the second quarter of 2013 and import volumes have improved. A strong upswing, however, would require a significant improvement in the cargo performance of airlines in the Asia-Pacific region. They are the largest players in global air cargo with a collective 38% market share. Their year-on-year performance for August was basically flat (-0.2%).

"There are some signs of improvement in demand, but the air freight business remains very tough," said Tony Tyler, IATA's Director General and CEO.

"Freight volumes are only now reaching the levels of 2011 when the cargo business peaked with revenues of $67 billion. This year we expect $59 billion of revenues from air cargo globally. That takes the top line back to 2007 levels. But to earn that revenue, we will be moving nearly 17% more cargo and dealing with a 40% hike in jet fuel. The road ahead will be challenging."

The bulk of the August growth came from carriers in Europe and the Middle East, while Asia-Pacific volumes were stagnant and African volumes fell significantly.

Asia-Pacific airlines' freight demand was basically flat (-0.2%) compared to the previous August. That is an improvement on the year-to-date performance which showed a 1.9% decline. The 'flatline' performance of the region's carriers can be largely attributed to a slowdown in emerging markets and a deceleration of China's growth over the first half of the year. A rebound in trade growth from July (in response to the strength of developed markets) could be an encouraging sign. However the region's carriers will be facing stiffer competition for long-haul cargo. Airlines based in the Middle East, for example, have expanded their cargo business significantly (12.7% year-to-date).

European carriers' freight grew 3.4% in August, with capacity up 4.2%. The European economy has started growing again and imports have increased. Eurozone export orders reached a 27-month high in August which should lead to strong export growth in the months ahead.

North American airlines showed signs of a small pick-up, with growth of 0.7%. There has been considerable volatility in North American freight performance in 2013. Year-to-date, North American carriers have seen cargo demand slip by 1.2%.

Middle Eastern carriers continued the strong growth that has been characteristic for the region all year. In August year-on-year freight volumes were up 23.8%, though this was exaggerated by the impact of Ramadan, which fell a month earlier this year. Year-to-date growth stands at 12.7%. It appears Middle Eastern freight growth has accelerated in recent months (even when neutralizing for the impact of Ramadan). This has been supported by improving demand in developed economies. Their strategic location and efficient hub connections are making them a growing competitor for air freight between Asia's manufacturing centers and European consumers, for example.

Latin American airlines grew their freight volumes strongly, up 12.6% in August. Robust trade volumes in Latin America (up nearly 8% in July since the start of the year) are providing a solid foundation for expansion in air freight demand.

African carriers experienced another decline in freight volumes, down 9.7%. After a positive start to 2013, African air freight growth has slowed and is now up by just 0.7% for the year to date. Despite healthy trade volumes and strong growth in many African countries, African airlines face intense competition on key trade routes.

Source: http://www.tandlnews.com.au/2013/10/08/article/air-cargo-stuck-in-the-slow-lane/
Contribute Copyright Policy
Air Cargo Stuck in The Slow Lane Transport
Topics: Service