IATA: strong growth behind us and protectionist measures impacting world trade

The best of the upturn in air freight demand is long gone and the wider momentum in world trade also looks to be slowing in the face of a pick-up in protectionist measures, according to the International Air Transport Association’s (IATA) Chartbook for Q2 2018.

The association’s quarterly cargo market analysis also said strong consumer confidence and bottlenecks in global supply chains should “continue to lend support” to air freight demand in the near term.

However, IATA said that business surveys currently point to annual FTK growth slowing further in Q3 2018 and forecast the annual FTK growth in Q3 to be just shy of two per cent.

Year-on-year growth in air freight tonne kilometres (FTKs) slowed to four per cent in the three months ending April, with freight volumes now having broadly tracked sideways in seasonally adjusted (SA) terms over the past six months.

The biggest concern it seems is the rising global protectionist measures which the association says suggest that wider momentum in world trade is weakening and the slowing trend in air freight demand has been echoed in other trade measures such as containerized trade.

As for yields, the upward trend has moderated since the start of the year, IATA said.

“The less favourable supply and demand dynamics that have developed over the past six months or so mean that the upward trend in cargo yields has slowed from that seen in H2 2017. Nonetheless, carry-over effects mean that cargo yields were still 16.2% higher in May than they were a year ago,” the association added.

However, the ongoing increase in daily freighter aircraft utilisation should help reduce average costs and partly offset the impact of rising fuel prices.

“Moreover, daily utilisation rates of large freighter aircraft have continued to trend upwards, having recently risen above 11 hours per day for the first time since 2012,” IATA added.

IATA said heads of cargo are slightly more cautious in their outlook than before when surveyed in early April, when airline chief were positive about the outlook for freight volumes over the year ahead.

“Our respondents remained positive about the outlook for cargo yields, with the weighted -average score rising to its highest level in almost eight years,” IATA added.