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As Need for Speed Eases, Global Air Freight Growth Slows

Demand for air freight has slowed as the need for speed has dropped off somewhat, even as increases in global e-commerce prop up demand, the International Air Transport Association (IATA) said in its monthly report released Monday, indicating a fall-off in international air cargo demand in Europe and the United States dragged down growth.

According to IATA, demand in global air freight markets, measured in freight ton kilometers (FTKs), rose 2 percent in September compared to the year-ago period. The growth rate was flat from the previous month but less than half the five-year average growth rate of 5.1 percent.

Freight capacity, measured in available freight ton kilometers (AFTKs), grew 3.2 percent year-on-year in September. This was the seventh consecutive month that capacity growth outstripped demand.

IATA said the growth, although tepid, was supported by strong consumer confidence and the expansion of international e-commerce. But the cargo sector has been weighed down by a softening of key demand drivers, which include a global contraction in manufacturing firms’ export order books for first time since June 2017. Export order books contracted in all of the world’s major exporting nations in September, except the U.S., IATA noted.

The organization, which represents some 290 airlines comprising 82 percent of global air traffic, said longer supplier delivery times have been reported by manufacturers in most of Asia and Europe, the top two global trading areas by volume. This typically translates into less need for the speed afforded by air freight.

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“But there is also some positive news,” said Alexandre de Juniac, IATA’s director general and CEO. “For example, strong consumer confidence goes hand-in-hand with expanding international e-commerce trade to give air cargo a boost. The bigger message for the sector is the need to modernize processes. There is some progress with the electronic air waybill becoming the default document on enabled trade lanes from 2019. But there is much more that must be done with governments and the supply chain to bring air cargo processes into the modern era.”

All regions except Africa reported year-on-year demand growth in September. Asia-Pacific airlines saw demand for air freight increase 1.2 percent for the month compared to last year. This was a slight decrease from the previous month, as weaker manufacturing conditions for exporters, particularly in Japan, China and South Korea cut into demand, as did disruptions to freight operations from typhoon activity. Capacity among Asia-Pacific airlines increased by 1.2 percent.

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

Freight volume for North American airlines rose 1.5 percent in September year over year. Capacity increased by 4.9 percent over the same period, according to IATA. “The recent momentum of the U.S. economy and strong consumer spending have helped bolster the demand for air cargo, benefiting U.S. carriers,” the organization noted. “However, international air cargo demand declined sharply in September. This contributed to year-on-year cargo demand falling to a 28-month low of 1.5 percent in September.”

European airlines posted a 1.5 percent increase in freight demand for the month compared to September 2017, as capacity rose 0.9 percent year over year. International air cargo demand for the group fell to a 30-month low of 1.2 percent in September.

“As with the North American slowdown, it is too soon to say if this is the start of a wider weakening in demand,” IATA said.

Middle Eastern carriers posted the fastest growth of any region in September, with demand rising 6.6 percent from a year earlier. IATA said there are some signs of a pick-up in seasonally adjusted air cargo demand for the group supported by more two-way trade with Europe and Asia. Capacity among the region’s carriers grew 7.7 percent compared to a year earlier.

Freight demand growth among Latin American airlines rose 2.9 percent in the month and capacity increased 4.3 percent. “Some of the smaller markets within the region have seen strong growth in international freight volumes so far this year,” IATA said. “Nevertheless, the broader pick-up in demand seen over the last 19 months has now paused.”

African carriers saw freight demand fall 2.1 percent in September from a year earlier, the sixth time in seven months that demand contracted. Capacity increased by 6.2 percent year-on-year.