Weakening freight growth for 2007 presages a slowdown in 2008 for the air cargo business, warned an industry association.

Air freight traffic increased just 4.3 percent in 2007, according to a report released Thursday by the International Air Transport Association. That number compared badly with 4.6 percent growth in 2006 and 7 to 8 percent growth in the preceding years. It also compared badly with a 7.5 percent growth rate for all world trade, indicating a loss of market share to ocean shipping.

Air freight demand grew 4.7 percent in December, up from 3.5 percent in November. But the monthly variance was largely due to temporary, year-end related, factors, said IATA.

Middle East carriers led all regions in 2007, but their growth rate of 10.1 percent was significantly lower than the 16.1 percent they showed in 2006. Airlines in Asia Pacific, which account for 45 percent of the international total, saw freight demand rise 6.5 percent in 2007, driven by strong growth in several economies in the region, said IATA.

The industry as a whole reaped a $5.6 billion profit in 2007, the first profit since 2000.

Based on the certainty of high oil prices and the uncertainty of other economic factors, IATA predicts growth in air freight demand to slow in the first half of 2008 before picking up with overall growth of 4 to 4.5 percent projected for the full year.

"Despite the ambiguity of strong passenger growth accompanied by weaker freight demand, we can say clearly that 2007 was the best in recent memory," said Giovanni Bisignani, IATA's director general and CEO. "We can state equally clearly that there will be no encore performance in 2008. Oil prices are higher than ever. Economic uncertainty accompanying the U.S. credit crunch is broadening."