Cargo news
What happened to the air cargo market in Q2 2018?
The upward trend of seasonally adjusted (SA) air freight tonne kilometres (FTKs) is clearly behind us. Could this signal uncertainty in global trade? In its latest Cargo Chartbook, the International Air Transport Association (IATA) cites that despite consumer confidence, annual FTK growth is slowing.
In overall market developments, industry-wide FTKs slowed to an 18-month low of four per cent, with freight volumes tracking sideways over the past six months. As a result, air freight’s share of world trade has fallen, which is in line with rising protectionist measures.
On key international routes, year-on-year FTK growth slowed. Three of the four major routes saw freight volumes fall. That said, there is a wide range in cargo throughput with Shanghai posting the fastest growth in May (8.6%) while Frankfurt and Dubai saw declines.
In terms of market drivers, both business and consumer confidence have remained positive and should support demand for air freight in the near term. The pick-up coincides with a stronger global economic and trade backdrop. Recent gains, however, have been driven solely by developments in emerging economies. Meanwhile, new export orders fell to a 21-month low despite ongoing signs of bottlenecks in supply chains helping to support demand for air freight. This indecisive outlook is consistent with a recent business survey of cargo heads that points to annual FTK growth of just under two per cent in Q3 2018.
Year-on-year growth in AFTKs is around three times faster with European airlines the only region to have slowed capacity growth. Daily utilisation rates of large freighter aircraft have continued to trend upwards, recently exceeding 11 hours per day for the first time in six years. Increased utilisation will hopefully help to reduce average costs and to offset operating costs from rising fuel prices.
And although the outlook for the rest of the year is less positive with a squeeze on airline operating profit margins, most heads of cargo expect air freight volumes to rise.
Cargo market analysis chartbooks are published quarterly on the IATA website.
