Air cargo volumes plateau in 2014
Since the beginning of 2014, air cargo volumes have been flat, according to the International Air Transport Association.
Airfreight markets in March were up 5.9 percent year over year and capacity grew 3.4 percent. While this marks a significant improvement in volumes compared to March 2013, much of the growth took place in the final quarter of 2013 (more than the usual year-end volume growth).
The plateau in volumes this year is consistent with the recent pause in improvements to business confidence and world trade.
“Cargo markets had a boost in the last quarter of 2013, but have now leveled off,” said Tony Tyler, IATA’s director general and CEO. “It is a competitive industry with growing capacity chasing weak demand. The business cycle will eventually swing upwards. But the air cargo industry also needs to improve its value proposition if it is to attract growth when markets improve. Modernizing air cargo processes and infrastructure offers the potential to cut end-to-end shipping times by up to 48 hours. We cannot let market doldrums hold us back from this critical competitive gain.”
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Business conditions in the U.S. and Europe, however, provide a reason to be cautiously optimistic for a resumption of growth in the months ahead. Rising export orders, in particular, are expected to give positive momentum to U.S. and European markets. But this is balanced against the effect of a slowdown in Chinese manufacturing, which is now into its fourth month. This has already affected exports from emerging Asian countries, which contracted in February.
In the 40 years since the introduction of the 747 freighter, the end-to-end shipping time for goods by air has remained unchanged at six to seven days. During this period, innovators have created a new value proposition for shippers and consumers based on an end-to-end model, speeding up deliveries through integrating the airline and ground components of freight, challenging the existing business model for many participants.
- Asia-Pacific carriers grew 6.9 percent compared to a year ago. Some of the March growth will reflect a resumption of business activity after the break for the Lunar New Year. Looking ahead, however, the continuing slowdown of Chinese GDP growth is likely to ultimately affect trade growth and airfreight demand for local carriers. Capacity grew by 7.5 percent, running slightly ahead of demand.
- European airlines expanded by 5.1 percent. Measures of business activity in the Eurozone have been pointing to continuous expansion since mid-2013. Capacity expanded just 1.3 percent, strengthening load factors.
- North American carriers grew 1.9 percent. The slower growth could be a reflection of the weather-related disruption in the first quarter of the year. Business fundamentals in North America are strong, which should support greater airfreight volumes in coming months. Capacity declined by 0.3 percent.
- Middle Eastern carriers saw a 13.2 percent rise in FTK volumes. This strong performance comes on the back of airlines taking advantage of growth in both developed and emerging markets. Carriers in the region are expanding their networks and services, broadening the range of goods they transport. Capacity grew just 4.7 percent, taking the load factor to nearly 50 percent.
- Latin American air cargo volumes were flat. Trade in the region deteriorated in early 2014, which could explain the slowdown. Capacity rose by 2.3 percent, weakening the load factor.
- African airlines expanded 5.9 percent. Growth in the region remains volatile, but the average for the first quarter was an expansion of 1.5 percent. Growth has been affected by a slowdown in the South African economy. Capacity grew broadly in line with demand, at 5.5 percent.