The International Air Transport Association has reported in its ‘Cargo Chartbook Q3 2018’ that the yearly increase in air freight ton kilometres (FTKs) decelerated to 2.8% during the three-month period ending in July.
This was “its slowest pace on this basis in more than two years”, the Chartbook states. “While FTKs are continuing to increase in seasonally adjusted terms, the upward trend has slowed markedly from that seen during the best of the upturn in air freight last year . . . Annual FTK growth has slowed on all the major international markets over the past year, and recently fell into negative territory on the Europe– Asia market for the first time since mid-2016.”
On a route basis, the three-month period that ended in June (not July), saw year-on-year increases in FTKs on North America–Asia (4.3%), Europe–North America (4.9%) and international routes within Asia (3.2%). The Asia–Europe route saw a decline of 0.8%. On a quarter-on-quarter basis, FTKs across the industry for the three-months ending July (not June) were higher than for the previous three-month period, but by only 1.2%. In the quarter ending June (not July), North America–Asia saw a rise of 1.6%, Europe–North America an increase of 2.5% and international routes within Asia a slight rise of 0.3%, while Asia–Europe experienced a fall of 2%, on a quarter-on-quarter basis. The total amount of air freight flown during the second quarter of this year (that is, ending June) was 10.4-million tons.
“The slower upward trend in FTKs has come alongside a similar trend in global trade volumes,” observes the report. “As a result, having risen between 2016 and mid-2017, air freight’s share of world trade has been broadly stable over the past nine months or so. “Year-on-year growth in global containerised (that is, surface – land and sea) trade has also declined since mid-2017. All told . . . wider momentum in world trade growth also looks to be weakening.” In the three months ending July (not June), global container throughput was, on a year-on-year basis, up 3.6% and, on a quarter-by-quarter basis, up 1.2%. Global trade volumes, in the quarter ending June (not July), increased by 3.7% on a year-on-year basis, but registered no increase quarter-on-quarter.
These developments have been driven by two major factors. One is that the global inventory restocking cycle has now come to an end. This restocking cycle allowed air freight, because of its higher speed, to outstrip global trade during 2016 and 2017. The second key development has been the increase in trade protectionism and a slowing momentum in the growth of global trade. This is shown by the decline in the growth rates for both air freight and containerised freight. Business confidence surveys indicate that business confidence declined during the northern hemisphere summer. This indicates that FTK growth will decelerate again during the last quarter of this year.
Nevertheless, there is still good news for the sector. “Less favourable supply and demand dynamics mean that the upward trend in cargo yields has slowed from that seen in the second half of 2017. Nonetheless, cargo yields including fuel and other surcharges were still 14.9% higher in year-on-year terms in July,” reports the Chartbook. “Daily utilisation rates of large freighter aircraft also remain elevated at around 11 hours per day – rates last seen in 2012. Increased utilisation of freighter aircraft will continue to help reduce average costs, and to help to offset ongoing upward pressure on operating costs.”
Consequently, when their opinions were sought early in July, the heads of airline cargo operations were upbeat about the volumes of air freight during the next 12 months, although a little less so than they had been earlier this year. “That said, our respondents were increasingly positive about the outlook for cargo yields.”