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Air Freight Demand Rose in September Whilst Cargo Capacity Lagged Behind

Latest IATA Figures Released to Show a Slowdown in Growth but Still HealthyShipping News Feature WORLDWIDE – The International Air Transport Association (IATA[1]) released data for global air freight markets in September 2017 showing that demand (measured in freight tonne kilometres or FTKs), rose 9.2% compared to the same month in 2016. This was the slowest pace of growth seen in five months. However, it was still significantly higher than the five-year average growth rate of 4.4%.

Meanwhile available freight capacity (AFTKs) rose by 3.9% compared to September of last year, less than half the pace of demand growth.

IATA considers this situation favours air cargo carriers with improved industry load factors, yields, and financial performance. However the Swiss headquartered organisation says the industry has passed a cyclical growth peak. The upward trend in seasonally-adjusted freight volumes in Q3 has eased and the inventory-to-sales ratio in the US is now ‘trending sideways’.

This indicates that the period when companies look to restock inventories quickly, which often gives air freight a temporary boost, has ended. However IATA postulates that with year-to-date demand growth of 10.1%, the IATA forecast of 7.5% growth in air freight demand for 2017 appears to have significant upside potential even if indeed the peak of the economic cycle has passed. Alexandre de Juniac, IATA’s Director General and CEO observed:

“Demand for air cargo grew by 9.2% in September. While that’s slower than in previous months, it remains stronger than anything we have seen in recent memory. But there are signs that this demand spurt may have peaked.

So it becomes even more important to reinforce the industry’s competitiveness by accelerating the modernization of its many antiquated processes.” Region by region demand consistently outstripped available capacity during September. Asia-Pacific airlines saw freight volumes increase by 9.3% in September 2017, compared to the same period last year whilst capacity in the region expanded 5.3%.

North American carriers posted an increase in freight volumes of 7.4% for the month; the region also posted the second fastest international growth rate among regions (11.0%), meanwhile capacity increased just 1.4%. European airlines posted a 10.3% increase in freight demand in September 2017, and a capacity increase of 5.6% and Middle Eastern carriers’ year-on-year freight volumes increased 8.9% in September 2017 and capacity was up 2.6%. Latin American airlines experienced a growth in demand of 7.6% in September 2017 and capacity increased by 5.9% compared to the same period in 2016.

African carriers posted the largest year-on-year increase in demand of all regions in September 2017, with freight volumes rising 17.7%. This is a slowdown from August but still more than twice the five-year average growth pace of 8.9%. Capacity increased by 2.6% over the same time period.

Total freight traffic market shares by region of carriers in terms of FTK are: Asia-Pacific 37.4%, Europe 23.5%, North America 20.7%, Middle East 13.9%, Latin America 2.8%, and Africa 1.6%.

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References

  1. ^ IATA (www.iata.org)

Air Freight Demand Rose in September Whilst Cargo Capacity Lagged Behind

Latest IATA Figures Released to Show a Slowdown in Growth but Still HealthyShipping News Feature WORLDWIDE – The International Air Transport Association (IATA[1]) released data for global air freight markets in September 2017 showing that demand (measured in freight tonne kilometres or FTKs), rose 9.2% compared to the same month in 2016. This was the slowest pace of growth seen in five months. However, it was still significantly higher than the five-year average growth rate of 4.4%.

Meanwhile available freight capacity (AFTKs) rose by 3.9% compared to September of last year, less than half the pace of demand growth.

IATA considers this situation favours air cargo carriers with improved industry load factors, yields, and financial performance. However the Swiss headquartered organisation says the industry has passed a cyclical growth peak. The upward trend in seasonally-adjusted freight volumes in Q3 has eased and the inventory-to-sales ratio in the US is now ‘trending sideways’.

This indicates that the period when companies look to restock inventories quickly, which often gives air freight a temporary boost, has ended. However IATA postulates that with year-to-date demand growth of 10.1%, the IATA forecast of 7.5% growth in air freight demand for 2017 appears to have significant upside potential even if indeed the peak of the economic cycle has passed. Alexandre de Juniac, IATA’s Director General and CEO observed:

“Demand for air cargo grew by 9.2% in September. While that’s slower than in previous months, it remains stronger than anything we have seen in recent memory. But there are signs that this demand spurt may have peaked.

So it becomes even more important to reinforce the industry’s competitiveness by accelerating the modernization of its many antiquated processes.” Region by region demand consistently outstripped available capacity during September. Asia-Pacific airlines saw freight volumes increase by 9.3% in September 2017, compared to the same period last year whilst capacity in the region expanded 5.3%.

North American carriers posted an increase in freight volumes of 7.4% for the month; the region also posted the second fastest international growth rate among regions (11.0%), meanwhile capacity increased just 1.4%. European airlines posted a 10.3% increase in freight demand in September 2017, and a capacity increase of 5.6% and Middle Eastern carriers’ year-on-year freight volumes increased 8.9% in September 2017 and capacity was up 2.6%. Latin American airlines experienced a growth in demand of 7.6% in September 2017 and capacity increased by 5.9% compared to the same period in 2016.

African carriers posted the largest year-on-year increase in demand of all regions in September 2017, with freight volumes rising 17.7%. This is a slowdown from August but still more than twice the five-year average growth pace of 8.9%. Capacity increased by 2.6% over the same time period.

Total freight traffic market shares by region of carriers in terms of FTK are: Asia-Pacific 37.4%, Europe 23.5%, North America 20.7%, Middle East 13.9%, Latin America 2.8%, and Africa 1.6%.

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References

  1. ^ IATA (www.iata.org)

Air Freight Demand Rose in September Whilst Cargo Capacity Lagged Behind

Latest IATA Figures Released to Show a Slowdown in Growth but Still HealthyShipping News Feature WORLDWIDE – The International Air Transport Association (IATA[1]) released data for global air freight markets in September 2017 showing that demand (measured in freight tonne kilometres or FTKs), rose 9.2% compared to the same month in 2016. This was the slowest pace of growth seen in five months. However, it was still significantly higher than the five-year average growth rate of 4.4%.

Meanwhile available freight capacity (AFTKs) rose by 3.9% compared to September of last year, less than half the pace of demand growth.

IATA considers this situation favours air cargo carriers with improved industry load factors, yields, and financial performance. However the Swiss headquartered organisation says the industry has passed a cyclical growth peak. The upward trend in seasonally-adjusted freight volumes in Q3 has eased and the inventory-to-sales ratio in the US is now ‘trending sideways’.

This indicates that the period when companies look to restock inventories quickly, which often gives air freight a temporary boost, has ended. However IATA postulates that with year-to-date demand growth of 10.1%, the IATA forecast of 7.5% growth in air freight demand for 2017 appears to have significant upside potential even if indeed the peak of the economic cycle has passed. Alexandre de Juniac, IATA’s Director General and CEO observed:

“Demand for air cargo grew by 9.2% in September. While that’s slower than in previous months, it remains stronger than anything we have seen in recent memory. But there are signs that this demand spurt may have peaked.

So it becomes even more important to reinforce the industry’s competitiveness by accelerating the modernization of its many antiquated processes.” Region by region demand consistently outstripped available capacity during September. Asia-Pacific airlines saw freight volumes increase by 9.3% in September 2017, compared to the same period last year whilst capacity in the region expanded 5.3%.

North American carriers posted an increase in freight volumes of 7.4% for the month; the region also posted the second fastest international growth rate among regions (11.0%), meanwhile capacity increased just 1.4%. European airlines posted a 10.3% increase in freight demand in September 2017, and a capacity increase of 5.6% and Middle Eastern carriers’ year-on-year freight volumes increased 8.9% in September 2017 and capacity was up 2.6%. Latin American airlines experienced a growth in demand of 7.6% in September 2017 and capacity increased by 5.9% compared to the same period in 2016.

African carriers posted the largest year-on-year increase in demand of all regions in September 2017, with freight volumes rising 17.7%. This is a slowdown from August but still more than twice the five-year average growth pace of 8.9%. Capacity increased by 2.6% over the same time period.

Total freight traffic market shares by region of carriers in terms of FTK are: Asia-Pacific 37.4%, Europe 23.5%, North America 20.7%, Middle East 13.9%, Latin America 2.8%, and Africa 1.6%.

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References

  1. ^ IATA (www.iata.org)