The world air cargo market is heading for a ‘rough ride’ in the next few months due to China’s economic slowdown and the uncertain world economic outlook, IATA warned today as it announced a slight volume decline in July.
Air freight volumes measured in freight tonne kilometers (FTK) fell 0.6% year-on-year, in line with weaker global economic growth, pushing year-to-date growth down to 2.9%. International traffic contracted by 0.7% in July, leaving growth of 3.2% over the first seven months of the year, while domestic traffic increased by a fractional 0.2% and is slightly higher for the year as a whole.
The decline was broad-based across all regions with the exception of Africa and the Middle East. The most pronounced falls were in the Americas, where international FTK volumes were down more than 5% compared to July 2014, but Asia was also down by 1.9%.
“The recent stock market turmoil shows that investors have real fears about the strength of the global economy. And the disappointing July freight performance is symptomatic of a broader slowdown in economic growth. The combination of China’s continued shift towards domestic markets, wider weakness in emerging markets, and slowing global trade indicates that it will continue to be a rough ride for air cargo in the months to come,” said Tony Tyler, IATA’s Director General and CEO.
At a regional level, Asia-Pacific carriers saw a year-on-year fall of 1.9% in FTKs in July while capacity expanded 5.3%. The region has experienced notable declines in imports and exports during 2015, with Chinese manufacturing particularly struggling, IATA noted.
European carriers reported a 1.5% fall in demand and capacity rose 3.9%. Central and Eastern Europe has had an especially tough few months, with trade in this region falling around 10% since the end of the first quarter, according to the airline association.
North American airlines experienced a decline of 3.7% year-on-year and capacity grew 5.4%. Despite the subdued performance of the U.S. economy in the first quarter, air freight benefited from a modal shift to air as a result of the West Coast ports strike in the U.S. This impact has faded and although economic performance likely improved in Q2, this does not seem to be driving stronger air freight demand, IATA commented.
Middle Eastern carriers saw the strongest growth with demand expanding by 10.8%, and capacity rising 18.3%. The reason for the slightly more subdued performance in July is due to the timing of Ramadan, which traditionally gives a boost to air freight. Ramadan started in June this year whereas it took place mostly in July last year.
Latin American airlines reported a fall in demand of 5.1% year-on-year, and capacity expanded 3.2%. Regional trade activity, Brazil and Argentina excepted, was very solid in the first half of 2015, but this did not feed through into stronger demand for air freight.
African carriers experienced growth in demand of 3.6%, and capacity rose by 11.4%. In contrast to Latin America, the strong regional trade performance in the region has underpinned solid air freight growth, despite the underperformance of the Nigerian and South African economies.
Meanwhile, researchers WorldACD said that worldwide air cargo volumes increased by 0.7% in July but yields dropped by 1.8% (in US dollars).
Looking at China air cargo trends, WorldACD said that outbound China air freight volumes had been outpaced by the rest of the world over the last nine months with a 1.8% rise compared to the RoW increase of 3.8%. In contrast, inbound volumes to China have risen by 3.5%, in line with worldwide inbound growth of 3.4%.
