Air cargo volumes could bounce back at lower prices in 2020, IATA says

Airlines suffered the sharpest downturn in air cargo for a decade in 2019 but could see a modest recovery next year thanks to a trade upturn, although average rates look set to continue their downward trend, according to new International Air Transport Association (IATA) forecasts.

Worldwide air cargo traffic (measured in FTKs) is expected to slump by 3.3% this year, which would be the steepest drop since 2009, with some 61.2 million tonnes flown compared to 63.3 million tonnes in 2018, IATA’s latest economics report showed.

Weak global GDP growth of 2.5% and low world trade growth of just 0.9% dragged down demand for air cargo capacity, leading to an expected 5% drop in airline cargo yields this year.

In October, the peak season kicked off with a 3.5% year-on-year drop in air cargo traffic, including a 5.3% drop for airlines in Asia Pacific, a 2.4% fall in North America and a 1.5% decline in Europe, according to the association’s latest monthly traffic figures showed.

Air freight volumes were also down by 3.5% over the first 10 months of the year, according to IATA figures, led by a 6.2% slump for Asia Pacific airlines and lower volumes for carriers in Europe (-2.2%) and North America (-1.2%).

"Slowing economic growth, trade wars, geopolitical tensions and social unrest, plus continuing uncertainty over Brexit all came together to create a tougher than anticipated business environment for airlines,” said Alexandre de Juniac, IATA's Director General and CEO, commenting on this year’s main trends.

But he added: “It appears that 2019 will be the bottom of the current economic cycle and the forecast for 2020 is somewhat brighter.”

Looking ahead to next year, IATA was optimistic about a modest recovery for air cargo due to better world economic trends. GDP is forecast to expand by 2.7% in 2020 (marginally above the 2.5% growth in 2019). “World trade growth is expected to rebound to 3.3% from 0.9% in 2019, as election year pressures in the USA contribute to reduced trade tensions,” the association pointed out.

Cargo traffic is expected to rebound moderately with 2% growth in 2020, with tonnes forecast to reach 62.4 million, although this would still be below the 2018 result. The value of trade (goods) carried will reach $7.1 trillion dollars, up 5.1% over 2019.

But yields will continue to slide with a 3% decline forecast for 2020, albeit less than the 5% decline this year. Average air freight rates in 2020 are expected to be $1.66/kg (2018 dollars), down from $1.77 this year and $1.92 in 2018.

As a result, airline cargo revenues will slip for a third year in 2020 with revenues expected to total $101.2 billion, down 1.1% from 2019, IATA said.