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IATA data shows continued slowdown in June freight growth

The International Air Transport Association (IATA) has released data for global air freight markets showing that the demand, measured in freight tonne kilometres (FTKs), rose 2.7 percent in June 2018, compared to the same period last year. This continues the slowdown in air cargo growth that began earlier in 2018. Growth for the first half of 2018 stands at 4.7 percent, less than half the growth rate in 2017.

The freight capacity measured in available freight tonne kilometres (AFTKs), rose by 4.1 percent in June 2018. Capacity growth has now outstripped demand growth in every month since March.

The three main factors identified as the drivers for slowdown are:

1.    The restocking cycle, during which businesses rapidly built up inventories to meet demand, ended in early 2018. There was a marked fall in air cargo volumes from March.

2.    We are now seeing a structural slowdown in global trading conditions as indicated by the fall in the purchasing managers index (PMI) to its lowest level since 2016. Factory export order books have turned negative in China, Japan and the US.

3.    The temporary grounding of the Nippon Cargo Airlines fleet in the second half of June exaggerated the slow-down by shaving up to 0.5 percentage points off June growth.

June 2018 
(% year-on-year)

World share¹

FTK

AFTK

FLF      
(%-pt)²     

FLF 
(level)³  

Total Market        

100.0%     

2.7%         

4.1%    

-0.6%      

44.3% 

Africa

1.9%

-8.5%

-1.4%

-1.9%

24.9%

Asia Pacific

36.9%

1.5%

5.2%

-2.0%         

54.5%

Europe             

24.2%             

3.3%

5.4%       

-0.9%         

44.6%             

Latin America             

2.7%

5.9%

-5.7%

4.1%

37.2%

Middle East             

13.7%

3.8%

4.5%

-0.3%

43.7%

North America            

20.6%

3.8%

3.4%

0.1%

35.8%

¹% of industry FTKs in 2017   ²Year-on-year change in load factor   ³Load factor level              

"Air cargo continues to be a difficult business with downside risks mounting. We still expect about 4 percent growth over the course of the year. But the deterioration in world trade is a real concern. While air cargo is somewhat insulated from the current round of rising tariff barriers, an escalation of trade tension resulting in a ‘reshoring’ of production and consolidation of global supply chains would change the outlook significantly for the worse. Trade wars never produce winners. Governments must remember that prosperity comes from boosting their trade, not barricading economies," said Alexandre de Juniac, IATA’s director general and CEO.

All regions except Africa reported a year-on-year increase in freight volumes in June 2018, but the slow growth in Asia-Pacific, which accounts for nearly 37 percent of the entire air cargo market, dragged the global growth rate down.

 

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