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Logistics
World air cargo demand slows as capacity rises: IATA
Date:2018-07-06 Readers:
AIR cargo capacity outstripped demand for the fourth consecutive month in May, with traffic expected to grow at a slower pace for the rest of 2018.

The latest figures from the International Air Transport Association (IATA) show that freight tonne kilometres (FTKs) increased by 4.2 per cent year on year in May, compared with a 5.3 per cent increase during the first five months.

But load factors for the month declined to 44.6 per cent compared with 45.5 per cent in May 2017 as supply additions outstripped demand growth, reports London's Air Cargo News.

This slowdown is reflected in the organisation's mid-year forecast, with its growth prediction for 2018 reduced to four per cent compared with the 4.5 per cent prediction made at the start of the year.

IATA said there are three indications that cargo traffic will grow at a slower pace this year: the end of a re-stocking cycle, the new export orders component of the of the purchasing management index being at a 21-month low as global trade appears to softening in light of incoming protectionist tariffs.

"We expect air cargo demand to grow by a modest four per cent in 2018. That's an uptick from a very weak start to the year," said IATA director general and CEO Alexandre de Juniac.

"But headwinds are strengthening with growing friction among governments on trade. We still expect demand to grow, but those expectations are dampened with each new tariff introduced," he said.

Looking at regional performance, Asia-Pacific airlines saw freight demand increase in May by 4.9 per cent compared to the same period last year and capacity increased by 7.4 per cent.

"As the largest freight-flying region, carrying close to 37 per cent of global air freight, the risks from protectionist measures impacting the region are disproportionately high," IATA said. "That said, there are signs that demand is accelerating for international FTK's."

North American airlines' freight volumes expanded 5.9 per cent in May compared to the same period a year earlier. This was an increase in demand from the 4.6 per cent rate of growth recorded the previous month.

According to IATA, the recent momentum of the US economy and the US dollar has helped strengthen demand for air imports.

European airlines posted a 2.3 per cent increase in freight volumes in 2018, which was a slowdown from the 3.5 per cent rate of growth the previous month as capacity increased six per cent.

Middle Eastern carriers saw freight volumes grew 2.4 per cent in May.

"This was a significant deceleration in demand [growth] of over 6.9 per cent the previous month. The decrease mainly reflects developments from a year ago rather than a substantive change in the current freight trend," said IATA.

Latin American airlines experienced growth in demand of 11.4 per cent in May, which is the largest increase of any region for the third consecutive month, and capacity increased by 1.5 per cent.

IATA said the pick-up in demand over the last 18 months comes alongside signs of economic recovery in the region's largest economy, Brazil.

Finally, African carriers saw freight demand contract two per cent compared to the same month last year and capacity increased by 20.4 per cent.

After a surge in international FTK volumes last year, demand growth has slowed. This mainly reflects a softening in demand on markets to/from Asia and the Middle East.
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