You know things are improving, in general, when the word “robust” is used to describe growth that is slowing down. The latest airfreight data results from IATA showed that April’s growth clocked in at 8.5 percent, year-over-year, in the wake of the previous month’s double-digit 13.4 percent growth rate.
IATA’s report is now the third data set – after Drewry and World ACD – to confirm the substantial growth rate for April. At 3.5 percent over the growth average for the previous five years, even yields are starting to tick up, with WorldACD reporting that worldwide yields grew by US$0.02 over March, and by US$0.05, y-o-y.
African airfreight markets led the pack, adding 26.0 percent on strong surge in trade lanes to and from Asia, which increased by 55 percent so far this year.
With a contraction of 1.9 percent, IATA’s April numbers for Latin America were markedly lower than those released by Airports Council International (ACI), which registered more encouraging numbers at 2.2 percent growth, y-o-y.
The Middle East also put up some disappointing numbers. At just 3.1 percent, the decades of double-digit growth seem to be slipping away, as the region adjusts to a statelier economic reality.
In more good news for carrier’s bottom lines, however, growth in freight capacity, measured in available freight tonne kilometers (AFTKs), slowed to 3.9 percent in April 2017, 4.6 percent behind growth in volumes. In hotter markets, this development is translating into some carriers requiring block space agreements (BSAs) in order for freight to fly.
Business confidence indicators remain consistently upbeat, as well, which IATA regards as evidence that year-over-year FTK growth will remain robust for the rest of the second quarter.
However, an economist from the aviation organization warned that “there are signs that the cyclical growth peak for air cargo has passed, particularly given that the inventory-to-sales ratio stopped falling at the end of last year.”
Demand for air cargo usually signals the beginning of an economic upturn, as companies look to restock inventories quickly. But even with inventory demand levels falling, IATA said that airfreight is headed for a healthy growth rate of 7.5 percent for 2017, bolstered by strong pharmaceutical and e-commerce traffic.
“Demand eased in April. Growth rates, however, are still much more robust than anything we have seen in the last six years,” said Alexandre de Juniac, IATA’s director general and CEO. However, de Juniac warned that a few strong months should not be taken as a message that all is well in the sector. Instead, he stressed that “the industry’s antiquated processes need modernization. With e-air waybill utilization topping 50 percent in April, progress is being made. And we must harness the momentum to drive transformational change across the way the industry operates.”Like This Post