air cargo shows slight recovery
According to the recent IATA study, airline cargo businesses are starting to see a slightly better demand environment and further improvement in forward-looking indicators, but continued increases in capacity have kept downward pressure on yields and revenues. Air freight growth has improved in 2013 compared to 2012, in line with positive cyclical developments in business conditions. Business confidence has been on the rise since the start of Q3. Consumer confidence in Europe is at the highest levels since 2011, and stronger economic performance has stopped earlier declines in Chinese consumer confidence. These developments have supported a rise in demand for air-freighted commodities like semi-conductors. But expected gains have been limited by an on-shoring of production, which has limited international trade growth. Moreover, continued increases in capacity have countered the modest improvements in demand, causing yields to decline. This trend could continue as new aircraft deliveries come into service in 2014. Cargo heads surveyed in October 2013 remain broadly optimistic, expecting yields to improve slightly over the next 12 months, supported by views of an increase in traffic growth.