Will Stagnant World Trade Hurt Air Cargo?

Global airfreight demand, measured in freight tonne kilometers, grew by 3.8 percent in 2016 compared to 2015, according to data released by The International Air Transport Association (IATA). This was nearly double the industry’s average growth rate of 2 percent over the past five years. Freight capacity, measured in available freight tonne kilometers, increased by 5.3 percent in 2016.

All regions except Latin America experienced positive freight growth in 2016, notes IATA. Carriers in Europe accounted for almost half the total annual increase in demand.

After a weak start to 2016, global freight volumes recovered in the second half of the year. A strong peak season, an increase in silicon materials shipments, and a turnaround in new export orders contributed to the later uptick in demand. The early timing of the Lunar New Year—in January 2017— may also have helped push demand higher in December, IATA reports.

Here’s the growth by region:

  • Asia-Pacific carriers saw freight volume demand grow 9.8 percent in December 2016 compared to the same period in 2015. Capacity grew by 5.7 percent. This contributed to freight demand growth of 2.1 percent in 2016 compared to 2015, and slightly below the 2.3-percent increase the previous year. However, seasonally adjusted volumes are now back to 2010 levels during the bounceback from the global financial crisis.
  • North American airlines saw freight demand increase by 3.7 percent in December 2016 year-on-year and capacity decrease 1.4 percent. This contributed to modest annual growth in 2016 of 2 percent, up from 1.3 percent the previous year. Capacity grew by 3.4 percent in the 2016 calendar year. The strong U.S. dollar continued to boost the inbound market but kept the export market under pressure.
  • European airlines posted a 16.4-percent year-on-year increase in freight demand in December and a capacity rise of 5.9 percent. The healthy results helped boost cargo volumes for the 2016 calendar year by 7.6 percent—the largest increase of all regions, accounting for almost half the total global annual increase in freight demand. Capacity increased by 6.7 percent in the 2016 calendar year.
  • Middle Eastern carriers’ freight volumes increased 11.2 percent year-on-year in December and capacity increased 5.9 percent. This contributed to an annual increase in demand of 6.9 percent in 2016—the second fastest growth rate of all the regions. However, this was the region’s slowest pace of growth since 2009 and well below the 12-percent average annual rate seen over the past decade. The slowdown is mainly due to weak freight volumes between the Middle East and Asia, and the Middle East and Europe.
  • Latin American airlines experienced a demand contraction of 1 percent in December 2016, compared to the same period in 2015 and a 7.9 percent decrease in capacity. The drop in demand was reflected in the region’s 2016 overall performance—a 4.2-percent decrease in freight volumes, the second consecutive year that demand has fallen. Despite this, in seasonally adjusted terms, growth levels are in line with where they were at the start of 2016. The region continues to be blighted by weak economic and political conditions, particularly in Brazil.
  • African carriers had the second-fastest growth in year-on-year freight volumes, up 13.6 percent in December 2016 and a capacity increase of 5.3 percent. This contributed to an annual growth in freight demand of 3.1 percent in 2016, down from 4.5 percent in 2015. However, capacity surged by 25.5 percent in the 2016 calendar year on the back of long-haul expansion, particularly by Ethiopian Airlines, causing a fall in the freight load factor.

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