Global Air Freight Volumes Continue To Decline

 - August 7, 2019, 2:54 PM

Airlines flew on average with 54.6 percent of their cargo capacity empty in June as global demand for air freight, measured in freight tonne kilometers (FTKs), decreased by 4.8 percent, IATA’s latest air freight market analysis revealed. The June freight load factor finished 3.5 percentage points lower than its level of a year ago.  

After a sustained period of robust growth, the level of available freight tonne kilometers (AFTKs) flattened considerably over the past six to eight months—they rose 2.7 percent in the first half—which, according to the airline body, shows one of the ways operators have responded to the weaker demand environment.  Demand in June fell for the eighth consecutive month year-on-year and prompted IATA to reiterate its July 26 warning that “the outcomes over the year to date mean that our forecast for zero average growth in 2019 looks optimistic.” Airfreight volumes in the first half finished 3.6 percent lower than those registered in the same period a year ago and load factor lost 3 percentage points, to 46.3 percent.

IATA blamed the languishing performance of world trade and the effect of the U.S.-China trade dispute for the deteriorating air cargo performance. U.S. goods exports to China fell 18 percent compared with the first half of 2018 while goods imports from China fell more than 12 percent. “Global trade continues to suffer as trade tensions—particularly between the U.S. and China—deepen. As a result, air cargo markets continue to contract,” said IATA director general and CEO Alexandre de Juniac. “Nobody wins a trade war. Borders that are open to trade spread sustained prosperity. That’s what our political leaders must focus on.”

The June weakness in air freight volumes compared with a year ago remains broad-based across regions, except for Africa—which accounts only for just a 1.7 percent share of the global market.

Africa remained the strongest performer for the fourth consecutive month and recorded a 4.3 percent year-on-year increase in international FTKs in June. The latest route area data (May 2019) show strong, double-digit performance on routes between Africa and Asia in particular—up 12 percent year-on-year. At the same time, and in stark contrast to the capacity developments in all other regions, the African market has seen a strong increase in capacity, generating 17 percent higher AFTKs year-on-year.

The Middle East and North America recorded the largest falls in air freight volumes on cross-border services in June, by around 7 percent on the year-ago period. Trade tensions with China accounted for “of course a key part of the story for the North American carriers,” IATA noted. FTKs fell more than 5 percent on routes to and from Asia. However, FTKs also fell on routes to/from Europe, South America, and the Middle East due to the broader global trade and macroeconomic environment.

Asia-Pacific airlines saw demand for international air freight contract by 5.4 percent in June 2019. As with North America, the China-U.S. trade tensions contributed significantly, though the performance of the Chinese economy affected demand across the region and caused a drop in FTKs for the within-Asia market by more than 10 percent on June 2018.

Asia-Pacific and North America continue to rank as the top contributors to world freight volumes; jointly, they account for around 3 percentage points of the June year-on-year decline in FTKs.

European airlines posted a 3.6 percent decrease in freight demand in June compared with the same period a year earlier. Latin American airlines experienced a slight drop of one percent, mainly due to weakness in the within-South America market (especially Brazil and Argentina), where FTKs fell 6.5 percent.