The latest market data released by IATA confirms that growth for the first half of 2018 stands at less than half that of 2017, at just 4.7%.
Capacity has now outstripped demand growth every month since March, with available freight tonne kilometres (AFTKs) rising by 4.1% in June 2018.
IATA has attributed three main factors to the slowdown:
- The end of the restocking cycle in early 2018
- A structural slowdown in global trading conditions, 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
- The temporary grounding of the Nippon Cargo Airlines fleet in the second half of June exaggerated the slowdown by shaving up to 0.5 percentage points off June growth
IATA’s Director General and CEO, Alexandre de Juniac, said that, over the course of the year, 4% growth in the industry is still expected but that 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,” he commented.
Despite the conditions, all regions except Africa reported a year-on-year increase in freight volumes in June; however, slow growth in Asia-Pacific, which accounts for nearly 37% of the entire air cargo market, dragged the global growth rate down overall. Freight demand here increased by just 1.5% in June 2018.
European airlines posted a 3.3% increase in freight volumes in June 2018, with North American and Middle Eastern carriers seeing a 3.8% expansion in volumes. Latin American airlines, meanwhile, continued their recent streak of seeing the highest increases, posting growth in demand of 5.9% in June, while African carriers saw a contraction in freight demand 8.5%.
IATA's full June market analysis can be viewed here: https://bit.ly/2MhfpfL