Global air freight demand posts 2-digit growth in July

Robust international trade, rising export orders and business confidence continued to push air cargo demand.

Latest International Air Transport Association (IATA) data showed that global demand, measured in freight tonne kilometers (FTKs), grew 11.4% in July, 2017 versus the same period a year ago, the fourth time in five months that the industry recorded double-digit annual growth,

July’s year-on-year increase in demand was nearly four times higher than the ten-year average growth rate of 3.1%.

Freight capacity, measured in available freight tonne kilometers (AFTKs), grew by 3.7% year-on-year in July 2017. Demand growth continues to significantly outstrip capacity growth, which is positive for airline yields and the industry’s financial performance.

Indeed, “July was a strong month for air cargo and for the third consecutive month, demand for air freight grew at a faster pace than demand for air travel," confirmed Alexandre de Juniac, IATA’s Director General and CEO.

But "While the outlook for the rest of the year remains positive, there are signs that the cyclical growth period may be nearing a peak,” he added.

Seasonally-adjusted air freight volumes were flat in June and fell in July; and the global inventory-to-sales ratio has stabilized. Air cargo often sees a boost in demand at the beginning of an economic upturn as companies look to restock inventories quickly. This tapers as inventories are adjusted to new demand levels.

So far, Asia-Pacific airlines’ freight volumes grew 11% in July 2017 compared to the same period a year earlier and capacity increased by 6.3%.

Demand growth was robust on all the major routes to, from and within the region. Seasonally-adjusted international freight volumes fell slightly in July but remain more than 3% above the volumes reached following the 2010 post-global financial crisis bounceback.

Middle Eastern carriers’ year-onyear freight volumes increased 9.3% in July 2017 and capacity decreased 0.4%.

Seasonally-adjusted international freight volumes have maintained their solid upward trend. However, amid strong competition from other region’s carriers particularly on the AsiaEurope route, the Middle East carriers are not seeing as strong a pickup in the seasonally adjusted traffic trend as other region’s carriers.

North American carriers posted an increase in freight volumes of 11.9% in July 2017, and a capacity increase of 1.1%.

Seasonally-adjusted international freight volumes continued their strong upwards trend. The strength of the US dollar has boosted the inbound freight market over the past few years. Data from the US Census Bureau showed a 12.5% increase in air imports to the US in the first half of 2017. However, the decline in the US dollar since the start of the year is likely to help rebalance trade flows.

Latin American airlines experienced a growth in demand of 5.8% in July 2017 compared to the same period in 2016.