Air Freight Demand Grows by 12.1%

The International Air Transport Association (IATA) released data for global air freight markets showing that demand, measured in freight tonne kilometers (FTKs), increased by 12.1percent in August 2017, compared to the same period a year ago. This was the fifth time in six months of double-digit gains on the previous year’s performance. Demand is growing at exceptional speed when compared to the five-year average growth rate of 4.4 percent. Freight capacity, measured in available freight tonne kilometers (AFTKs), grew by 4.7 percent year-on-year in August 2017. Demand growth continues to significantly outstrip capacity growth, which is positive for industry load factors, yields, and financial performance. The strong performance of air freight demand corresponds with the pick-up in global trade. World trade volumes grew 4.2 percent in the first seven months of 2017 compared to 2016, their strongest performance since 2011. This is consistent with rising export orders, which are currently around their highest levels since March 2011, and upbeat business confidence indicators. Signs that the peak of the cyclical growth period may be near also continue. The global inventory-to-sales ratio in the US, for example, has stopped falling. This usually means that re-stocking to meet demand (which gives air freight a boost), is ending. The outlook for air freight remains strong. With several months of double-digit growth in 2017, the current IATA forecast of 7.5 percent growth in air freight demand for 2017 appears to have significant upside potential even if we are approaching a cyclical peak.