The International Air Transport Association (IATA) has released data for global air freight markets in October showing that demand, measured in freight tonne kilometres (FTKs), rose 8.2% year-on-year – the fastest pace of growth seen in 18 months.
Freight capacity, measured in available freight tonne kilometres (AFTKs), increased 3.6% over the same period.
“Global air freight markets look set to end 2016 on a high note. Demand is growing at its fastest pace in 18 months. It remains to be seen how long this growth trend will endure after the year-end peak period and we still face headwinds from weak global trade. But there are some encouraging signs. The peak has been stronger than expected. And purchasing managers are reporting a pick-up in new export orders. So we will enter 2017 propelled by some much-needed positive momentum,” said Alexandre de Juniac, IATA’s Director General and CEO.
The airline trade body underlined that some one-off factors are likely to have contributed to October’s positive results: the modal shift to air cargo following the collapse of the Hanjin Shipping Company in August and some last minute reliance on air transport as companies exercised caution in ordering as a result of weak market conditions earlier in the year.
The stronger performance in October could also have benefited in part from “structural market shifts”, including strong growth in cross-border e-commerce and pharmaceutical flows. Preparation for the increasing popularity of sales events such as Black Friday and Cyber Monday may also have contributed to the increased demand peak, IATA added.
“The drivers of stronger growth are sending a major signal for change to the air cargo industry. Whether it is e-commerce or the trade in pharmaceuticals, shippers are demanding more than current paper processes can support. The shift to e-freight is more critical than ever,” de Juniac emphasised.
Airlines in all regions except Latin America reported an increase in year-on-year demand in October. However, results continued to vary considerably.
Asia-Pacific airlines saw demand in freight volumes both from the intra-Asia air cargo market as well as on routes to and from the region increase in October compared to the same month last year.
“Regional demand increased 7.8% and capacity grew by 3.9%. International freight volumes expanded 8.0% in October, contributing to an annualized increase, in seasonally adjusted terms, of 15% since March 2016,” IATA said.
North American carriers’ freight volumes expanded 3.7% on a capacity increase of just 0.1%. International freight volumes increased by 7.2% in October – their fastest pace since the disruption at US seaports in February last year.
“Seasonally-adjusted freight volumes are back to the levels reached since the post-global financial crisis bounce-back in 2010. US exports continue to suffer from the strength of the US dollar which has kept the US export market under pressure.”
European airlines posted the largest increase in freight demand of all regions in October – 13.4% year on year. Capacity increased 5.9%.
“October’s positive performance corresponds with the sustained increase in export orders in Germany over the last few months and the ongoing weakness in the Euro. International freight demand grew by 13.2% year-on-year in October – the fastest pace since April 2011 – and the upward trend in seasonally-adjusted traffic was very strong.”
Middle Eastern carriers saw air freight demand increase by 9.2% in October 2016 year-on-year, marking an improvement over the last few months’ performance.
“However seasonally-adjusted growth has slowed, predominantly due to weak freight volumes between the Middle East and Asia, and the Middle East and North America. Capacity in the region increased by 4.2%.”
Latin American airlines experienced a demand contraction of 0.1% in October 2016, compared to the same period last year, while capacity decreased by 1.8%. International freight volumes grew by 0.2%.
“In seasonally-adjusted terms this is an improvement over the last few months. The region continues to be blighted by weak economic and political conditions, particularly in the region’s largest economy, Brazil.”
African carriers’ freight demand increased by 7.4% in October compared to the same month last year. However, capacity surged by 24.7% on the back of long-haul expansion, in particular by Ethiopian Airlines. “International freight demand for African airlines slowed in October, but still remained robust at 7.7% year-on-year.”
In its latest monthly report, market data specialist WorldACD confirmed the increasingly positive picture for air freight traffic. September year-on-year (YoY) volume growth of around 5% was “eclipsed” by 6.2% growth in October, it said.
“American and European carriers contributed most to the 3% MoM growth in yields (in US dollars), a higher month-on-month (MoM) growth for this month than in previous years. With that yield improvement, October was clearly a good month for air cargo. Actually, the real growth may even be somewhat understated, as October 2016 had less "good cargo days" than October 2015,” it noted.
WorldACD said that in Direct Tonne Kilometres (DTKs), its new measure multiplying shipment weight with the shortest distance between origin and destination of shipments, the October YoY growth was higher than the pure tonnage growth, coming in at 7.4%.
It said it had introduced the DTK concept since the traditional measure of freight tonne kilometres (FTKs) were “insufficient to tell us what happens in terms of true market development, because a change in FTKs combines market changes with purely operational routing changes” – for example, a shift in direct versus indirect carriers operating in a particular market.
The “undisputed driver” of the October results was Asia Pacific, in particular the origins China and Taiwan, with YoY volume growth of 12% and 19% respectively, accompanied by a MoM yield growth of 12% and 5% respectively.
“Although yield increases are not uncommon towards the year's end, the 9% increase from Korea deserves mention. It underlined the “good news at last, for long-suffering South America,” where yields improved by 10%, MoM, with volume growth of 3.6%, YoY.
“MESA and Africa held their own (volume growth in line with the worldwide average, though losing a little in MoM yields), whilst origins Europe and North America were rather flat.”
