International air cargo demand fell 1.5% in 2012 marking the second year of decline in a rowfollowing a 0.6% drop in 2011, according to full-year traffic data released today by IATA.
In December 2012, overall air freight demand declined 0.3% while capacity was 1.9% lower, asairlines sought to protect load factors.
The international airline association explained that air freight has come under pressure byslowing growth in world trade and shifts in the freight commodity mix. “Expanding emergingeconomies have driven demand for bulk items carried by sea, while economic weakness in the Westdampened demand for high-value consumer goods transported by air. Freight capacity grew just 0.2%over the year, and the freight load factor was 45.2%,” IATA said.
Tony Tyler, IATA’s Director General and CEO, commented: “In contrast to the growth in passengermarkets, the air cargo market contracted by 1.5%. The industry suffered a one-two punch. Worldtrade declined sharply and the goods that were traded shifted towards bulk commodities more suitedfor sea shipping. The outstanding bright spot was the development of trade between Asia and Africawhich supported strong growth for airlines based in the Middle East (14.7%) and Africa (7.1%).”
At a regional level, Asia Pacific carriers (the largest players in the air cargo market)reported a 5.5% decline in demand and cut capacity by 2.4%. As the world’s major manufacturingregion, Asia suffered from the slowdown in demand from Western markets. The freight load factor,although remaining the highest of all regions at 56.1%, fell more sharply than anywhere elseimpacting cargo profitability.
European and North American carriers also registered declines in freight demand of 2.9% and 0.5%respectively. European airlines increased their capacity by 0.3% which led to the load factorfalling to 47.2%. North American carriers managed to reduce capacity by 2.0%, ahead of the fall indemand, but it still left the region’s freight load factor at 35.0%, the second weakest of anyregion.
Latin American airlines saw freight demand decline by 1.2%, but capacity grew 4.9% over theyear, with the load factor falling to 38.3% as a result.
African and Middle Eastern carriers profited from new trade lanes and developing trade linksbetween the two regions. Their freight demand grew 7.1% and 14.7% respectively, both improvementson 2011 when the Middle East expanded 8.2% and Africa declined by 2.1%. The Middle East had thefastest capacity expansion of any freight region (11.4%) but the load factor still improved to44.8%. Africa’s freight capacity grew 9.2% outgrowing demand with the freight load factor fallingto just 24.7%, the lowest of any region by a significant margin.
In its outlook for 2013 published in December 2012, IATA predicted 1.4% growth in cargo demandthis year. Airlines are expected to improve profitability from $6.7 billion (1.0% net profitmargin) in 2012 to $8.4 billion (1.3% net profit margin) in 2013.
Looking ahead, Tyler concluded: “We are entering 2013 with some guarded optimism. Businessconfidence is up. The Eurozone situation is more stable than it was a year-ago and the US avoidedthe fiscal cliff. Significant headwinds remain. There is no end in sight for high fuel prices andGDP growth is projected at just 2.3%. But improved business confidence should help cargo markets torecover the lost ground from 2012. 2013 will not be a banner year for profitability, but we shouldsee some improvement on 2012.”
