Inside Logistics

Air cargo down on trade woes

Contracted by 3.2 percent in July 2019 year-over-year


September 6, 2019
by

GENEVA – Global air freight demand, measured in freight tonne kilometers (FTKs), contracted by 3.2 percent in July 2019, compared to the same period in 2018. This marks the ninth consecutive month of year-on-year decline in freight volumes, according to International Air Transport Association (IATA) data.

Air cargo continues to suffer from weak global trade and the intensifying trade dispute between the US and China. Global trade volumes are 1.4 percent lower than a year ago and trade volumes between the US and China have fallen by 14 percent year-to-date compared to the same period in 2018.

The global Purchasing Managers Index (PMI) does not indicate an uptick. Its tracking of new manufacturing export orders has pointed to falling orders since September 2018. And for the first time since February 2009 all major trading nations reported falling orders.

Freight capacity, measured in available freight tonne kilometers (AFTKs), rose by 2.6 percent year-on-year in July 2019. Capacity growth has now outstripped demand growth for the ninth consecutive month.

“Trade tensions are weighing heavily on the entire air cargo industry. Higher tariffs are disrupting not only transpacific supply chains but also worldwide trade lanes. While current tensions might yield short-term political gains, they could lead to long-term negative changes for consumers and the global economy. Trade generates prosperity. It is critical that the US and China work quickly to resolve their differences,” said Alexandre de Juniac, IATA’s Director General and CEO.

Regional Performance

Airlines in Asia-Pacific and the Middle East suffered sharp declines in year-on-year growth in total air freight volumes in July 2019, while North America and Europe experienced more moderate declines. Africa and Latin America both recorded growth in air freight demand compared to July last year.

Asia-Pacific airlines saw demand for air freight contract by 4.9 percent in July 2019, compared to the same period in 2018. The US-China trade war and weaker manufacturing conditions for exporters in the region have significantly impacted the market. With the region accounting for more than 35 percent of total FTKs, this performance is the major contributor to the weak industry-wide outcome. Air freight capacity increased by 2.5 percent over the past year.

North American airlines saw demand decrease by 2.1 percent in July 2019, compared to the same period a year earlier. Capacity increased by 1.6 percent over the past year. Despite a sound economic backdrop supporting consumer spending, the US-China trade tensions continue to weigh on the region’s carriers. Freight demand between Asia and North America have fallen by almost 5 percent in year-on-year terms.

European airlines posted a 2.0 percent decrease in freight demand in July 2019 compared to the same period a year earlier. Weaker manufacturing conditions for exporters in Germany, heightened recession fears, and ongoing uncertainty over Brexit, have impacted the recent performance. Capacity increased by 4.2 percent year-on-year.