Aviation

Global air freight demand peaks by 9.2%

 

The International Air Transport Association (IATA) released data for global air freight markets in September 2017 showing that demand, measured in Freight Tonne Kilometers (FTKs), rose 9.2 per cent compared to the same month in 2016.

This was the slowest pace of growth seen in five months. However, it was still significantly higher than the five-year average growth rate of 4.4 per cent.

Meanwhile, African carriers posted the largest year-on-year increase in demand of all regions in September 2017, with freight volumes rising 17.7 per cent.

According to the clearing house for over 275 global airlines, the volume is a slowdown from August but still more than twice the five-year average growth pace of 8.7 per cent.

Freight capacity, measured in Available Freight Tonne Kilometers (AFTKs), rose by 3.9 per cent compared to September of last year —less than half the pace of demand growth. This is positive for industry load factors, yields, and financial performance.

It appears that the industry has passed a cyclical growth peak. The upward trend in seasonally-adjusted freight volumes in Q3 has eased and the inventory-to-sales ratio in the US is now trending sideways. This indicates that the period when companies look to restock inventories quickly—which often gives air cargo a boost—has ended.

IATA’s Director General and Chief Executive Officer (CEO), Alexandre de Juniac, observed that while the demand in September is slower than in previous months, it remains stronger than anything we have seen in recent memory.

“But there are signs that this demand spurt may have peaked. So it becomes even more important to reinforce the industry’s competitiveness by accelerating the modernisation of its many antiquated processes,” de Juniac said.

With year-to-date demand growth of 10.1 per cent, the IATA forecast of 7.5 per cent growth in air freight demand for 2017 appears to have significant upside potential even if the peak of the economic cycle has passed.

On the African front, capacity increased by 2.6 per cent over the same time period. Demand has been boosted by very strong growth on the trade lane to and from Asia which increased by more than 67 per cent in the first eight months of the year. However the upward trend in seasonally-adjusted volumes has flattened in recent months.

On how other regions performed, the Asia-Pacific airlines saw freight volumes increase by 9.3 per cent in September 2017, compared to the same period last year. Capacity in the region expanded 5.3 per cent. Demand growth was strong on all the major routes to, from and within Asia-Pacific, consistent with strong export order books for the region’s manufacturers.

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