Slow growth in Asia Pacific dragged air cargo demand down in June as freight tonne kilometers (FTKs) rose year-on-year (YOY) by 2.7 per cent, according to the International Air Transport Association (IATA).
The association said the performance continues the slowdown in growth that began earlier in 2018 and for the first half of 2018 freight is up 4.7 per cent, which is less than half the rate in 2017.
Regionally, FTKs in Africa fell YOY by a substantial 8.5 per cent in June, while all other regions were up with Latin America the highest at 5.9 per cent, North America 3.8 per cent, Middle East 3.8 per cent, Europe 1.5 per cent and Asia Pacific, which accounts for 37 per cent of the entire air cargo market at 1.5 per cent.
Freight capacity, measured in available freight tonne kilometres (AFTKs), rose YOY by 4.1 per cent in June, meaning capacity growth has now outstripped demand growth in every month since March. The freight load factor was down YOY by 0.6 percentage points to 44.3 per cent in the month.
IATA said there are three main factors driving the slowdown. Firstly the restocking cycle, during which businesses rapidly built up inventories to meet demand, ended in early 2018 and there was a marked fall in air cargo volumes from March.
Secondly, there is now a structural slowdown in global trading conditions as indicated by the fall in the Purchasing Managers Index (PMI) to its lowest level since 2016. Factory export order books have turned negative in China, Japan and the US.
Thirdly, the temporary grounding of the Nippon Cargo Airlines fleet in the second half of June exaggerated the slowdown by shaving up to 0.5 percentage points off June growth.
IATA’s director general and chief executive officer, Alexandre de Juniac (above) said: “Air cargo continues to be a difficult business with downside risks mounting. We still expect about 4% growth over the course of the year. But the deterioration in world trade is a real concern.
“While air cargo is somewhat insulated from the current round of rising tariff barriers, an escalation of trade tension resulting in a ‘reshoring’ of production and consolidation of global supply chains would change the outlook significantly for the worse.
“Trade wars never produce winners. Governments must remember that prosperity comes from boosting their trade, not barricading economies.”