Cargo growth strong despite Ukraine crisis
Tony Tyler is CEO and director general of IATA.
While air cargo is growing globally, the ongoing Russia-Ukraine crisis is contributing to sluggishness in Europe, according to IATA’s freight analysis for July.
Compared to July 2013, freight tonne kilometers (FTKs) rose 5.8 percent. This is an acceleration in growth from June when cargo demand grew at less than half that rate (2.4 percent).
The strong growth mirrors positive developments in some key regional economies. After a slowdown at the start of the year, global business confidence and trade are showing signs of improvement again, especially in Asia-Pacific. Global air cargo volumes have now surpassed their previous July peak, in 2010, and look set to continue to increase. European airfreight, however, grew just 1.8 percent. This reflects the effects of the Russia-Ukraine crisis (including the effect of mounting economic sanctions), which is adding to economic weakness in the Eurozone.
“Overall, July saw growth accelerate,” said Tony Tyler, IATA’s director general and CEO. “That’s good news and it reflects the continued strengthening of business confidence at a global level. But the air cargo industry is moving at two speeds with a sharp divide in regional performance. European carriers reported anemic growth of just 1.8 percent while all other regions reported solid gains of 5 percent or more on the previous year. In particular, the 7.1 percent. Growth reported by airlines in Asia-Pacific is encouraging as it demonstrates a recovery in trade and a positive response to China’s economic stimulus measures.”
Regional Analysis in Detail
Asia-Pacific airlines showed their strongest rise in air cargo volumes since the start of 2013, increasing 7.1 percent compared to a year ago. The fortunes of the region’s carriers are tied to the strength of major economies such as China, Japan and South Korea, which are expanding again after a slowdown at the start of the year. Capacity grew 4 percent.
European carriers saw little improvement in cargo demand, expanding FTKs just 1.8 percent compared to a year ago. The weakness of major economies such as France and Italy, along with the effect of EU sanctions on Russia, has dampened demand. Capacity expanded 4.4 percent.
North American airlines grew their FTKs by 5.2 percent. After weakness in the first quarter, trade volumes have rebounded and business growth trends look positive for the months ahead. Capacity fell 1.3 percent.
Middle Eastern freight markets expanded 9.4 percent. This strong performance came despite the effect of Ramadan. Airlines in the region are capturing growth opportunities by opening routes to fast-developing economies such as Mexico and Uganda. Capacity rose 7.8 percent.
Latin American carriers grew FTKs by 7.6 percent year-on-year. This encouraging performance could be the start of a pick-up in activity following months of weakness, particularly in Brazil. Capacity contracted 0.6 percent.
African carriers’ FTKs grew 11.3 percent. However, African freight volumes remain highly volatile, and given the slowdown in South Africa this year, it is too early to say that prolonged growth acceleration is underway. Capacity grew 4.5 percent.