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Air freight market shrinks, records unprecedented loss

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Global air freight market last year recorded a decline in volume, the weakest outcome since 2012.

The International Air Transport Association (IATA), in the full-year 2019 data released yesterday, stated that the global volume fell by 3.3 per cent compared to 2018 while capacity rose by 2.1 per cent.

It was also the weakest performance since the global financial crisis in 2009 when air freight markets contracted by 9.7 per cent.

Meanwhile, in the African region that accounts for marginal 1.8 per cent of the global traffic, the carriers saw freight demand increase by 10.3 per cent in December 2019, compared to the same month in 2018.

The increase was reflected in the strong 2019 full-year performance, which saw Africa freight volumes expand 7.4 per cent. Capacity in December grew by 10 per cent and for 2019 in total, it increased by 13.3 per cent.

Over the year, air cargo volumes in Africa have been supported by strong capacity growth and investment linkages with Asia.

In the month of December, global cargo volumes contracted by 2.7 per cent year-on-year while capacity rose 2.8 per cent.

Air cargo’s performance in 2019 was dampened by weak growth in global trade of just 0.9 per cent. The sector’s underperformance was also due in particular to slowing Gross Domestic Product (GDP) growth in manufacturing-intensive economies.

Softer business and consumer confidence, along with falling export orders, also contributed to air freight struggles.

IATA’s Director General and CEO, Alexandre de Juniac, said there were signs that confidence and orders could pick up in 2020. But it is too early to say what long-term effects will be seen from the impact of restrictions associated with combatting the coronavirus outbreak.

“Trade tensions are at the root of the worst year for air cargo since the end of the Global Financial Crisis in 2009. While these are easing, there is little relief in that good news as we are in unknown territory with respect to the eventual impact of the coronavirus on the global economy.

“With all the restrictions being put in place, it will certainly be a drag on economic growth. And, for sure, 2020 will be another challenging year for the air cargo business,” de Juniac said.

All markets except Africa suffered volume declines in 2019. Asia-Pacific retained the largest share of FTKs, at 34.6 per cent. The share of freight traffic increased modestly for both North America and Europe, to 24.2 per cent and 23.7 per cent, respectively.

Middle East carriers’ traffic share held steady at 13 per cent. Africa and Latin America saw their shares lift marginally, to 1.8 per cent and 2.8 per cent.

Asia-Pacific carriers in December posted a decrease in demand of 3.5 per cent compared to the same period a year earlier. Capacity increased by 2.8 per cent. The full-year 2019 saw volumes decline 5.7 per cent, the largest decrease of any region, while capacity increased by 1.1 per cent.

As the world’s main manufacturing region, international trade tensions and the global growth slowdown weighed heavily on regional air freight volumes in 2019.  Within-Asia FTKs were particularly affected; down by eight per cent, compared to a year ago.

The North American airlines saw volumes fall by 3.4 per cent in December, while capacity grew by 2.1 per cent. For 2019 in total, the region’s cargo volumes declined by 1.5 per cent, compared to a capacity increase of 1.6 per cent. Trade tensions and cooling U.S. economic activity in the latter part of the year have been factors in the decline. The 5.6 per cent fall in international year-on-year volumes in December was the weakest monthly growth outcome for the region since early 2016.

European airlines experienced a 1.1 per cent year-on-year decrease in freight demand in December, with a capacity rise of 4.9 per cent. The fall in December was typical of the performance for 2019 as a whole, where volumes fell 1.8 per cent, but capacity increased by 3.4 per cent.

Softer activity, including in the manufacturing-intensive German economy, combined with ongoing Brexit uncertainty, contributed to the 2019 result, which in international freight volume terms was the weakest since 2012.


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