Global air freight markets showed demand measured in freight tonne kilometers (FTKs) rose 2.1 per cent in July 2018 compared to the same period the year before, according to the International Air Transport Association (IATA).
This was the slowest pace of growth the air cargo industry has seen since May 2016 according to IATA and well below the five-year average growth rate of 5.1 per cent.
Freight capacity, measured in available freight tonne kilometers (AFTKs), grew by 3.8 per cent year-on-year in July 2018. This was the fourth time in five months that capacity growth outstripped demand growth.
IATA said while the temporary grounding of the Nippon Cargo Airlines fleet may have exaggerated a slowdown in growth at the beginning of July, there are three indications that slower growth will continue.
Firstly, the association said the inventory re-stocking cycle, which requires quick delivery to meet customer needs, ended at the beginning of the year.
Secondly, there has been a broad-based weakening in manufacturing firms’ export order books. Specifically, export order books in Europe started weakening in February and have fallen in China and Japan in recent months.
Lastly, longer supplier delivery times are being reported by manufacturers in Asia and Europe, the top two global trading areas by volume. This typically means that they have less need for the speed afforded by air freight.
Regionally in July, Africa was the biggest loser as FTKs fell by 8.3 per cent, while all the other regions were up – Asia Pacific by 0.9 per cent, Europe 2.6 per cent, Latin America three per cent, the Middle East 5.4 per cent and North America 2.6 per cent.
IATA’s director general and chief executive officer, Alexandre de Juniac said: “July demand for air cargo grew at its slowest pace since 2016. We still expect 4% growth over the course of the year, however the downside risk has increased.
“The tariff war and increasingly volatile trade talks between the world’s two largest trading nations – China and the US – are rippling across the global economy putting a drag on both business and investor sentiment. Trade wars only produce losers.”