Global air freight growth slows in August

International air cargo traffic showed slightly slower growth in August with a 19.6%year-on-year improvement compared to 22.7% in July, according to figures published by the

IATA said the August results were partially distorted by the comparison to August 2009 whenmarkets were already expanding rapidly in a post-recession rebound. However, global internationalcargo traffic in August was still 3% above the pre-recession levels of early 2008.

“The rapid improvements in demand that we saw earlier this year are behind us. The slowdown ofdemand in August is consistent with our forecast for a tougher end to 2010 as government stimulusmonies run out without having generated significant improvements in employment. The bounce fromre-stocking is over. We do not yet see the strong consumer confidence needed to sustain theexpansion with spending,” said Giovanni Bisignani, IATA’s Director General and CEO.

Freight capacity is matching demand trends which are stabilising, IATA added. Since December2009, the freight volume expansion of 9.2% has been matched by capacity expansion. After a rapidimprovement throughout 2009, freight load factors have levelled off at 51.0%.

In regional terms, the patterns of recovery are shifting. Freight volumes carried by Asiancarriers have increased by 3.8% since January while European and North American carriers have seena 6-8% expansion over the same period.

“Several drivers are contributing to this shift,” IATA said. “Weaker currencies in the US andEurope are supporting export growth and improving the competitiveness of US and European carriers.Another contributor may be the fall in import activity in Europe and the US dampening the demandfor finished goods manufactured in Asia. Asian carriers are the largest participants in globalcargo markets with a market share of 44%. Consequently they are disproportionately affected by anytrend upwards or downward,” the association explained.

In August, Asia-Pacific airlines grew 22% compared to the previous August which is slightlybelow the 25.3% growth in July. Latin America experienced similar growth last month with 22.3%which was surpassed by the Middle East carriers showing an increase of 24.3%. North Americancarriers grew even stronger by 25.7%. European carriers showed the weakest growth at 9.6% inAugust.

Slower growth is consistent with IATA’s recently revised global industry outlook. Airlines areexpected to post a combined profit of $8.9 billion (up from the June forecast of $2.5 billion)based on an exceptionally strong first half of the year. The slower growth in demand in the secondhalf is expected to continue into 2011. But with capacity increasing faster than demand, yields arenot expected to grow. With a much tougher revenue environment, expectations are for a significantlyreduced profit of $5.3 billion in 2011, IATA specified.

“On $560 billion in industry revenue, our margins are just 1.6%. Having a bigger black number onthe bottom line is good. But we must also be realistic in understanding that the profitability isfragile. And the August results are a reminder that as we move into 2011, we are expecting a morechallenging revenue environment,” Bisignani concluded.