Quick Takes

September Air Freight Demand Slows

The International Air Transport Association (IATA) released data for global air freight markets in September 2017 showing that demand (measured in freight tonne kilometers or FTKs), rose 9.2 percent 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 percent Freight capacity (measured in available freight tonne kilometers or AFTKs), rose by 3.9 percent compared to September of last year —less than half the pace of demand growth. This is positive for industry load factors, yields, and financial performance. IATA said it appears that 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 cargo a boost—has ended. “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 modernisation of its many antiquated processes,” said IATA’s Director General and CEO, Alexandre de Juniac. With year-to-date demand growth of 10.1 percent, the IATA forecast of 7.5 percent growth in air freight demand for 2017 appears to have significant upside potential even if the peak of the economic cycle has passed.