Air cargo demand growth sags

Technology | Staff Reporter 11 Feb 2019

Global air freight demand grew only by 3.5 percent year-on-year, as measured in freight ton kilometers, last year, significantly lower than the 9.7 percent growth in 2017, according to the International Air Transport Association, IATA.

Freight capacity, measured in available freight ton kilometers, was up by by 5.4 percent in 2018, outpacing annual growth in demand. This exerted downward pressure on the load factor but yields were resilient.

Air cargo performance was affected by softening in demand in December.

December demand fell by 0.5 percent year-on-year, which was the worst performance since March 2016. Freight capacity, however, grew by 3.8 percent yearly. This was the 10th month in a row that year-on-year capacity growth outstripped demand growth.

International e-commerce grew in 2018 which was a positive factor for the year.

Yet, there was a softening of several key demand drivers: the restocking cycle, during which businesses rapidly built up inventories to meet demand, ended in early 2018; global economic activity weakened; the export order books of all major exporting nations, with the exception of the United States, contracted in the second half of 2018; consumer confidence weakened compared to very high levels at the beginning of 2018.

"Air cargo demand lost momentum towards the end of 2018 in the face of weakening global trade, sagging consumer confidence and geopolitical headwinds. Still, demand grew by 3.5 percent compared with 2017. We are cautiously optimistic that demand will grow in the region of 3.7 percent in 2019. But with the persistence of trade tensions and protectionist actions by some governments, there is significant downside risk. Keeping borders open to people and to trade is critical," says Alexandre de Juniac, IATA's director general and chief executive.

"To attract demand in new market segments, the air cargo industry must improve its value proposition. Enabling modern processes with digitalization will help build a stronger foothold in e-commerce and the transport of time- and temperature-sensitive goods such as pharmaceuticals and perishables," de Juniac says.

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