IATA warns on global trade after November cargo flatlines

January 09, 2019
IATA freight low
No quick recovery in sight for air freight.

The International Air Transport Association (IATA) has warned that increasing international trade tensions continue to place pressure on the air cargo market after global air freight demand flatlined in November.

IATA said there was zero global demand growth in freight tonne kilometres in November and three regions — including the Asia-pacific — contracted.

This was the slowest rate of global growth recorded since March, 2016 and comes after 31 consecutive months of year-on-year increases.

Freight capacity, however, rose by 4.3 percent to mark the ninth month in a row that it outstripped demand.

International air freight is watched closely because it is often a “canary in the mine” signaling wider economic problems.

READ Airline profits forecast to rise in 2019 on lower fuel.

IATA said headwinds included signs of weakness in global economic activity, a contraction of export order books in all major export nations except the US and weakened consumer confidence compared to high levels at the start of 2018.

Shorter supply delivery times in Asia and Europe also contributed to the lack-luster result.

“Normally the fourth quarter is a peak season for air cargo,’’ said IATA director general Alexandre de Juniac. “So essentially flat growth in November is a big disappointment.

“While our outlook is for 3.7 percent demand growth in 2019, downside risks are mounting.

“Trade tensions are cause for great concern. We need governments to focus on enabling growth through trade, not barricading their borders through punitive tariffs.’’

The Asia-pacific, Europe and Africa all saw demand contract in November.

Asia-Pacific airlines saw demand for air freight shrink by 2.3 percent compared to the previous year while European carriers saw a contraction of 0.2 percent.

IATA attributed the falls in both regions to weaker manufacturing conditions for exporters and shorter supply delivery times, particularly in China and Germany.

African freight demand fell by 7.8 percent in November as demand conditions in all key markets remained weak

North American airlines posted the biggest growth with a 3.1 percent rise in demand, followed by Latin America (3.1 percent) and the Middle East (1.7 percent).

“The strength of the US economy and consumer spending have helped support the demand for air cargo over the past year, benefiting US carriers,’’ IATA said.