IATA Forecast Shows Improved Outlook for Air Cargo

 - October 24, 2014, 11:21 AM
IATA expects the UAE to supplant Germany as the third largest air freight market in the world by 2018. (Photo: Boeing)

A new airline industry forecast from the International Air Transport Association (IATA) shows that international freight volumes will expand at a compound annual growth rate of 4.1 percent over the next five years, suggesting a reasonably abrupt reversal of bad fortunes for a segment whose growth rate has averaged 0.63 percent a year since 2011. Emerging economies, particularly in the Middle East and Africa, will be the fastest growing markets, according to the report.

IATA predicts that the U.S., China and the United Arab Emirates will each add more than 1 million metric tons of freight by 2018. By that time, according to the forecast, the UAE will have replaced Germany as the third largest market. Routes between the Middle East and Asia will grow the fastest among all international markets, at 6.2 percent a year, followed by markets within the Middle East (4.6 percent), from North America to South America (3.9 percent) and Europe to Southern Africa (3.8 percent), it added.

Overall, the forecast shows that the Middle East’s compound annual growth rate (CAGR) of 4.7 percent will make it the fastest growing market during the forecast period. Africa will become the second-fastest-growing market, with a CAGR of 4.4 percent, followed by Asia-Pacific and Latin America, both of which will post a CAGR of 3.8 percent, said the report. The more mature markets of Europe and North America will grow at a 3.0 percent and 2.8 percent CAGR, respectively, it concluded.

“This year, more than $6.8 trillion worth of goods, equivalent to 35 percent of total world trade by value, will be transported around the world by air,” said IATA director general and CEO Tony Tyler. “So it is welcome to see a forecast for a return to growth for the air cargo sector after several years in the doldrums.”

Still, added Tyler, the “overall risks” to the economic outlook and, therefore, to air freight remain “toward the downside.”

“Trade protectionism is a constant danger,” warned Tyler. “According to the World Trade Organization (WTO), between November last year and May this year alone, 112 new trade-restrictive measures were enacted by G20 governments. Geopolitical concerns, volatility of oil prices and competition from rail and sea could also affect this forecast. The air cargo industry certainly cannot afford to be complacent.”