World air cargo volumes slowed again in May while yields continued to weaken, according to the latest figures from IATA and researchers World ACD.
Growth in worldwide freight tonne kilometres (FTK) in May was 2.1%, the slowest rate this year and outpaced by capacity expansion of 4.3%. On a year-to-date basis, freight volumes are up 4% on the previous year, but much of that growth was realised in the latter part of 2014, IATA said.
“Cargo growth has undoubtedly come off the boil. The expansion in volumes we saw in 2014 has ground to a halt, and load factors are falling. Some economic fundamentals still point to a rebound in the second half of the year, but we have to recognise that business confidence is flat and export orders in decline. There is also the risk of a shock to the economic system of a ‘Grexit’ from the Eurozone,” said Tony Tyler, IATA’s Director General and CEO.
Meanwhile, WorldACD said that worldwide air cargo yield in May was down by 2% (in US dollars) compared to April following the weak volume growth. However, excluding fuel surcharges there could have been a slight increase in average prices, it added.
As has been the case for a while, perishables (PER) and pharmaceuticals were the engines of growth again, the former playing a much larger role than the latter in terms of volumes. Worldwide growth in May was completely driven by these two categories with growth figures of 7% (perishables) and 13% (pharmaceuticals), according to WorldACD.
At a regional level, airlines in most regions, with the notable exception of those based in the Middle East, saw weak growth or even contractions, IATA said. In aggregate, airlines in North and Latin America and Europe reported that their freight business was smaller in May 2015 than in the same month of 2014. Carriers in Asia-Pacific experienced slow growth as a result of poor import/export performance.
Asia-Pacific carriers reported demand growth of 2.8% in May compared to May 2014, below a capacity expansion of 6.7%. At the end of Q1, trade volumes for emerging Asia markets were down 10% compared to Q4 2014, although there have been signs of improvement at the start of Q2, which if sustained, would help ease downward pressure on air freight demand, the airline association said.
European carriers saw demand decline by 1.3% in May, compared to a year ago while capacity grew by 2.7%. Consumer confidence remains subdued in the region, and the region is at risk of economic contagion if a disorderly ‘Grexit’ from the Euro were to occur, IATA commented.
North American airlines reported a fall in demand of 2.9% year-on-year while capacity was cut by 4.2%. The May result is a continuation of the disappointing economic performance in Q1. Stronger growth, however, is expected in coming months as the effects of poor weather and US seaport congestion fade, according to the association.
Middle Eastern carriers saw demand grow by 18.1%, on the back of increased trade within the region, as well as shippers taking advantage of the Gulf carriers’ hub strategy. Capacity expanded 19.4%.
Latin American airlines reported a fall in demand of 10.5%, while capacity grew by 4.7%. A general increase in regional trade activity has not yet manifested itself in stronger air freight demand, possibly due to continued weakness in Brazil and Argentina, two of the region’s largest economies, IATA said.
African airlines experienced a 3.0% rise in demand and a 1.3% increase in capacity. Despite some volatility, the region is the third-fastest growing for the year-to-date. The under-performance of the Nigerian and South African economies may be outweighed by trade activity in the wider region.
These volume trends impacted on regional air cargo yields. “The areas Europe and North America, volume-wise among the best performing areas only one month ago, were the laggards this time around, together with Central & South America (C&S Am), an area that has been suffering for a while,” WorldACD said. The growth in May came specifically from Africa and the Middle East & South Asia (MESA), with YoY increases of 8% and 5.5% respectively. MESA was also the fastest growing destination. Interestingly, the Americas did best when it comes to yield comparisons with May 2014, they pointed out.
