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Air Freight Gets Lift From E-Commerce, as Demand Rises

Pushed by cross border e-commerce demand, global air freight rose 3.1 percent in October from a year earlier, improving from a 29-month low of 2.5 percent growth in September, the International Air Transport Association (IATA) reported.

Freight capacity increased 5.4 percent year-on-year in October, the eighth month in a row that capacity growth outstripped demand.

However, the IATA said demand continues to be constrained by a reduction in shipments in all major exporting nations, longer supplier delivery times in Asia and Europe, and weakened consumer confidence.

“Cargo is a tough business, but we can be cautiously optimistic as we approach the end of 2018,” said Alexandre de Juniac, IATA’s director general and CEO. “Slow but steady growth continues despite trade tensions. The growth of e-commerce is more than making up for sluggishness in more traditional markets, and yields are strengthening in the traditionally busy fourth quarter. We must be conscious of the economic headwinds, but the industry looks set to bring the year to a close on a positive note.”

All regions reported year-on-year demand growth in October except Africa. Asia-Pacific airlines saw demand for air freight rise 1.9 percent in the month. Weak manufacturing conditions for exporters and longer supply lead times hurt demand, as companies were able to opt for cheaper but slower ocean freight. Capacity increased by 4.2 percent.

“As the largest freight-flying region, carrying more than one-third of the total, the risks from rising trade tensions are disproportionately high,” IATA said.

North American airlines posted the fastest growth of any region in October, with an increase of 6.6 percent. Capacity increased by 8.2 percent year over year.

“The strength of the U.S economy and consumer spending have helped support the demand for air cargo over the past year, benefiting U.S. carriers,” the report noted.

European airlines saw a 1.4 percent gain in freight demand in the month, as weaker manufacturing conditions for exporters deflated demand. Middle Eastern airlines’ freight volumes grew 5 percent in the month, with capacity increasing 8.8 percent.

Air freight demand in Latin America rose 0.3 percent, as international demand declined 0.9 percent, marking the first contraction in 11 months. African carriers saw freight demand decrease 4.2 percent in October 2018, but IATA said, “seasonally-adjusted international freight volumes have stopped declining and recovered sharply in recent months.”