Headwinds as global air cargo growth slows in 2018

GENEVA - Full-year 2018 data for global air freight markets released by IATA show that demand measured in freight tonne km (FTKs) grew by 3.5% compared to 2017. Growth in 2017 was extraordinary, at 9.7%.

Freight capacity, measured in available FTKs, rose by 5.4% in 2018, outpacing annual growth in demand. This exerted downward pressure on the load factor, but yields proved resilient, IATA says. 
Air cargo performance in 2018 was sealed by a softening in demand in December. Year-on-year, December demand decreased by 0.5%, the worst performance since March 2016. Freight capacity, however, grew by 3.8%.

It was the 10th month in a row that year-on-year capacity growth had outstripped demand growth.
IATA aid international e-commerce grew in 2018, but 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 US, 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," said Alexandre de Juniac, IATA's Director General and CEO.

"Still, demand grew by 3.5% compared to 2017. We are cautiously optimistic that demand will grow in the region of 3.7% 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."

de Juniac said that to attract demand in new market segments, the air cargo industry must improve its value proposition.

"Enabling modern processes with digitalisation will help build a stronger foothold in e-commerce and the transport of time- and temperature-sensitive goods such as pharmaceuticals and perishables."

In December 2018, Asia-Pacific accounted for 35.4% of all air cargo carried, but the total volume was down 4.5% compared with December 2017. Full-year 2018 demand was up just 1.7% on 2017.

"The weaker performance of Asia-Pacific carriers in 2018 largely reflects a slowing in demand for exports from the region's major exporters (China, Japan and Korea)," IATA said.

"Signs of a moderation in economic activity in China and an escalation of trade tensions continue to pose a downside risk to air cargo in Asia-Pacific." www.iata.org (ATI).