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Q2 airfreight growth shows improvement

By Staff Reports on June 13, 2014
tagged iata

Airfreight growth during Q2 2014 is showing solid improvement compared to a year ago, supported by the cyclical upswing in the global economy, but high jet fuel prices and weakness in yields continue to place downward pressure on financial performance, according to the International Air Transport Association.

Business confidence has flattened and world trade volumes have started to decline. Jet fuel prices have been stable, but remain high, and yields are down on a year ago, continuing to put strain on financial performance.

As new aircraft deliveries come into service in 2014, there could be further downward pressure on yields. Cargo heads surveyed in April expect yields to remain stable during the year ahead, and while they anticipate volumes to increase, rates of growth have been downgraded.  

Demand drivers are mostly positive. In China, consumer confidence remains stable, but in Europe and the U.S., there have been solid improvements over recent months. And although there has been a decline in capital expenditure intentions of Japanese companies, there has been a solid increase in the UK. These developments have supported growth in demand for airfreighted commodities such as semiconductors.

However, recent developments in the demand environment suggest that growth could weaken in months ahead.

Air cargo markets have maintained the 2013 year-end improvement over recent months, but there has been no further acceleration in growth, according to IATA. The pick-up in airfreight demand has been supported by cyclical improvements in economic growth.

But stronger economic growth has not generated the expansion of international trade that it would have done in the past, as production has been on-shored – partly due to market factors such as rising wages in low cost economies and partly due to a recent rise in protectionist measures. The Bali trade deal on trade facilitation may help to improve this situation.