Global airfreight demand grew in excess of 10 percent for the first six months of 2017, the strongest first half performance since 2010, according to recent data from the International Air Transport Association (IATA).
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IATA: Air cargo posts strongest first half-year growth since 2010.
Global air freight markets saw demand grow 10.4 percent in the first half of 2017 compared to the year prior, according to the International Air Transport Association (IATA).
The year has proved to be the strongest first half performance since air cargo’s rebound from the Global Financial Crisis in 2010 and nearly triple the industry’s average growth rate of 3.9 percent over the last five years, said IATA.
Freight capacity, measured in available freight tonne kilometers (AFTKs), grew by 3.6 percent in the first half of 2017 compared to the same period in 2016. Demand growth continues to significantly outstrip capacity growth, which is positive for yields, said IATA.
The increase in airfreight demand is partially due to improvement in global trade, with new global export orders remaining close to a six-year high, said IATA. However, there are some signs that the cyclical growth period may have peaked as the global inventory-to-sales ratio has stopped falling.
“This indicates that the period when companies look to restock inventories quickly, which often gives air cargo a boost, may be nearing an end,” IATA said. “Regardless of these developments, the outlook for air freight is optimistic with demand expected to grow at a robust rate of 8 percent during the third quarter of this year.”
All regions experienced positive freight growth in the first half of 2017, with carriers in Asia Pacific and Europe accounting for two-thirds of the increase in demand. Asia-Pacific airlines’ freight volumes and capacity grew 10.1 percent and 7.8 percent, respectively, in June 2017 compared to the same period a year prior. This contributed to a growth in freight demand of 10.1 percent in the first half of 2017 compared to the first half of 2016, said IATA.
Demand growth has been strongest, between 13 percent and 15 percent, on international routes in Asia and Europe, with capacity increasing 4.8 percent in the first half of 2017. European airlines posted strong freight demand and capacity increases of 14.3 percent 6.1 percent, respectively, in June 2017. According to IATA, the ongoing weakness of the Euro persists in boosting the performance of the European freight market which continues to benefit from strong export orders.
North American carriers saw freight demand increase by 12.7 percent and capacity increase by 3 percent in June 2017 year-over-year. “This contributed to strong growth in demand in the first half of 2017 of 9.3 percent in contrast to the negative growth seen during the same period in 2016…The strength of the US dollar continues to boost the inbound freight market but is keeping the export market under pressure,” said IATA.
Middle Eastern carriers’ saw an increase in demand in the first half of 2017 of 7.6 percent, well below the 10.8 percent average annual rate seen over the past five years. “The slowdown in growth is mainly due to strong competition from carriers in other regions particularly on the Asia-Europe route rather than a significant decrease in demand which has continued to trend upwards at a solid rate of around 10 percent in annualized terms since early 2017. For the first time in 17 years the region’s share of total international freight flown in the first half of 2017 has fallen,” said IATA.
Latin American airlines experienced a growth in demand of 9.8 percent in June 2017 compared to the same period in 2016, the fastest since November 2010, and an increase in capacity of 2.9 percent. However, capacity fell by 0.6 percent in the first half of 2017. The region continues to suffer from weak economic and political conditions, particularly in Brazil, said IATA.
African carriers had the fastest growth in year-on-year freight volumes, up 31.6 percent in June 2017 and a capacity increase of 7.6 percent, said IATA. This contributed to freight demand growing 25.9 percent in the first half of 2017 – the fastest of all regions. Demand has been boosted by very strong growth on the trade lanes to and from Asia which have increased by nearly 60 percent in the first five months of 2017.