Air freight demand reflects strong peak shipping season
Global air freight demand, measured in Freight Tonne Kilometers (FTKs), rose 6.8% in November, 2016, showing a strong peak season and coinciding with a surge in the shipment of silicon materials for high-value consumer electronics and their components, as well as a turnaround in new export orders.
A modal shift to air cargo following the collapse of the Hanjin Shipping Company in August may have also contributed, according to the International Air Transport Association (IATA).
It bodes well for 2017, stressed IATA’s Director General and CEO Alexandre de Juniac. These are “encouraging signs that growth will continue this year,” he elaborated. “But the trend in world trade is still stagnant. So it remains critically important for the air cargo industry to continue to improve its value offering by implementing modern customer-centric processes.”
While November’s figures showed a slight slowdown from the 8.4% annual growth recorded in October, 2016 - which was a 20-month high – it was still more than 2.5 times the average annual monthly growth rate of 2.6% over the past decade.
Growth in freight capacity, measured in available freight tonne kilometers (AFTKs), slowed to 4.4% November.
Airlines in all regions except Latin America reported an increase in year-onyear demand during this period.
Asia-Pacific airlines saw demand in freight volumes grow 6.1% versus the same period in 2015 and capacity grew by 4.0%. Seasonally-adjusted volumes are now back to the levels reached in 2010 during the post-global financial crisis bounce-back.
The increase in demand is captured in the positive outlook from business surveys in the region. Middle Eastern carriers enjoyed a boost in demand from the strong peak season with freight volumes increasing by 7.8% in November, 2016, year-on-year.
Seasonally-adjusted growth has slowed, however, mainly due to weak freight volumes between the Middle East and Asia, and the Middle East and Europe.
Freight volumes grew by just 4% on these routes in the January-October, 2016 period, compared with 8-11% over the same period in 2015. Capacity in the region increased by 5.1% in November.
North American carriers’ freight volumes expanded 5.6% in November 2016 compared to the same period a year earlier, and capacity increased by 2.6%. Freight traffic across the Atlantic continued to strengthen, increasing by 9.0% in October.
This is being driven in part by an increase in westbound import flows from Europe to the US helped by a strong dollar. However US exports continue to suffer from the strength of the US dollar.
Latin American airlines experienced a demand contraction of 1.3% in November 2016, compared to the same period last year. However in seasonally-adjusted terms growth levels are in-line with where they were at the start of 2016.
The region continues to be blighted by weak economic and political conditions, particularly in the largest economy, Brazil. The ‘within South America’ market has been the weakest performer to date with volumes down nearly 20% compared to the same period in 2015.
Capacity in the region decreased by 1.6% in November.
European airlines posted a 9.0% yearon-year increase in freight demand in November. This was a slight slowdown compared to the 13.3% growth recorded in October, possibly attributable in part to the strike at Lufthansa.
Notwithstanding, the seasonallyadjusted growth trend is strong and corresponds with the sustained increase in export orders in Germany over the last few months and the ongoing weakness in the Euro.
Capacity in the region increased by 4.8%. African carriers’ posted the largest increase in freight demand among the regions in November, 10.9% year-onyear, and the seasonally-adjusted growth remains strong.
However, capacity surged by 26.9% on the back of long-haul expansion, particularly by Ethiopian Airlines, and this caused the freight load factor to fall in annual terms for the 19th consecutive month.