Saturday January 25, 2020
09-01-20

Soaring e-commerce volumes slowed air freight decline in November

Packages fill airline capacity
Packages fill airline capacity

The surge in international e-commerce orders from November’s worldwide Black Friday and Singles Day sales events helped to limit the 13th consecutive monthly decline in worldwide air cargo traffic, according to new figures from the International Air Transport Association (IATA).

Air freight demand, measured in freight tonne kilometres (FTKs), decreased by 1.1% in November 2019, compared to the same period in 2018. This was the thirteenth consecutive month of year-on-year declines in freight volumes. Available capacity was up by 2.9%, meaning lower average load factors for airlines as capacity growth outstripped demand growth for the 19th consecutive month.

But IATA pointed out that despite this decline, November’s performance was the best in eight months, with the slowest year-on-year rate of contraction recorded since March 2019. “In part, November’s outcome reflects the growing importance of large e-commerce events such as Singles Day in Asia and Black Friday,” the airline association underlined.

However, while international e-commerce continues to grow, overall air cargo demand continues to face headwinds from the effects of the trade war between the US and China, the deterioration in world trade, and a broad-based slowing in global economic growth, it added.

“Demand for air cargo in November was down 1.1% compared to the previous year. That’s better than the 3.5% decline posted in October. But it is a big disappointment considering that the fourth quarter is usually air cargo’s peak season. Looking forward, signs of a thawing in US-China trade tensions are good news. But trading conditions at present remain very challenging,” said Alexandre de Juniac, IATA’s Director General and CEO.

At a regional level, airlines in Asia-Pacific, Latin America and the Middle East suffered sharp declines in year-on-year growth in total air freight volumes in November 2019, while North American carriers experienced a more moderate decline. Europe and Africa were the only regions to record growth in air freight demand compared to November 2018.

Asia-Pacific airlines saw demand for air freight contract by 3.7% in November 2019, compared to the year-earlier period. This was the sharpest drop in freight demand of any region for the month. Capacity increased by 1.8%. “The US-China trade war has significantly affected the region, with demand on the large Asia-North America market down 6.5% year-on-year in October (latest available data). However, the thawing of US-China trade relations and robust economic growth in key regional economies are positive developments,” IATA commented.

North American airlines saw demand decrease by 1.1% in November 2019, compared to the same period a year earlier. Capacity increased by 3.3%. Slower growth in the US economy and trade tensions with China have affected demand in the region.

European airlines posted a 2.6% increase in freight demand in November 2019 compared to the same period a year earlier. Better than expected economic activity in the third quarter in some of the region’s large economies helped support demand. Capacity increased by 4.0% year-on-year.

Middle Eastern airlines’ freight volumes decreased 3.0% in November 2019 compared to the year-ago period – a significant improvement over the 5.7% decrease in October. Capacity increased by 2.6%. Against a backdrop of operational and geopolitical challenges facing some of the region’s key airlines, seasonally-adjusted freight volumes in the region have continued a modest upwards trend, which is a positive development for the region’s carriers. However, escalating geopolitical tensions threaten the regions’ carriers in the period ahead, IATA cautioned. 

Latin American airlines experienced a decrease in freight demand in November 2019 of 3.4% compared to November 2018. Various social and economic headwinds in the region’s key economies have impacted the region’s air cargo performance. Capacity decreased by 2.3% year-on-year.

African carriers posted the fastest growth of any region in November 2019, with an increase in demand of 19.8% compared to the same period a year earlier. Strong trade and investment links with Asia contributed to the positive performance. Capacity grew 13.7% year-on-year.

Despite the continuing negative trends, IATA already said in December that it was hopeful for a turnaround this year. Worldwide air cargo traffic (measured in FTKs) is expected to have fallen by 3.3% in 2019, which would be the steepest drop in a decade.

But airlines could see a modest recovery in air cargo business in 2020 thanks to an upturn in international trade, although average rates look set to continue their downward trend, according to IATA’s most recent forecasts. Cargo traffic is expected to rebound moderately with 2% growth this year.

SourceIATA, CEP-Research
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