The International Air Transport Association (IATA) released data today indicating that cargo traffic, measured in freight tonne kilometers (FTKs), decreased by 4.8% year-over-year in June. Year-to-date demand is down 3.6% y-o-y. The further decline in traffic from last month suggests the air cargo industry is still in the doldrums as political economic volatility slows worldwide trade.
Freight capacity growth rose 2.6% y-o-y in June, up from 1.4% last month. For the first half of 2019, capacity increased 2.7%. According to IATA, in seasonally adjusted terms, available capacity has flattened considerably over the past six to eight months and shows one way airlines have responded to weaker demand following the strong demand seen last year.
With this decline in demand, freight load factor has also eased and is currently down 3.5 percentage points for June and 3.0 percentage points for 1H19 compared to the same respective periods the year prior. These figures, however, are “unsurprising” given the weakness in world trade observed since the second half of 2018, IATA said.
IATA credits additional tariff increases in the ongoing U.S.-China trade dispute, which came into effect on June 1, as likely contributing to the month’s outcome. U.S. goods exports to China are down 18% for the first half of 2019, compared to the same period the year prior, while U.S. goods imports from China are down over 12%.
Even though the Asia-Pacific and North America declines account for around 3 percentage points of the June losses, IATA recognizes weakness in air cargo more broadly, IATA said. FTKS are also lower on routes to and from Europe, Latin America and the Middle East, compared to the same period the year prior, according to the report.
Airlines in the Middle East, Asia-Pacific and North America regions were the weakest performers for the month. Their total FTKs fell 7.0%, 5.4% and 4.6% y-o-y, respectively. Meanwhile total capacity for the regions increased 2.7%, 1.8% and 1.9%, respectively. Year-to-date, airlines in these regions saw varied result: Middle Eastern carriers saw a 3.5% y-o-y decrease in FTKs and 2.1% increase in capacity; airlines in the Asia-Pacific region saw a decrease of 7.4% y-o-y in cargo traffic and 0.2% increase in available capacity; and North American airlines saw a slight decrease of 0.6% in demand, while available capacity increased by 2.5%.
Meanwhile, European airlines saw a 3.6% y-o-y decrease in freight demand y-o-y, signaling a return in market weakness for the region. Last month, IATA reported European carriers’ traffic declines had lessened to 0.2% decrease in air demand from the 6.9% seen in April. For the first half of 2019, European carriers’ traffic is down 1.9% y-o-y, with an increase in capacity by 5.2%.
Latin American airlines saw a 1.0% decline in June freight demand. Capacity increased by 4.6%. Year-to-date demand and capacity in the region are up 1.0% and 8.4%, respectively. According to IATA, recent economic outcomes in major Latin American countries, such as Brazil and Argentina, have contributed to weaker performance in the region. The IMF also recently downgraded GDP growth for the region to just 0.6% for the year.
Africa saw the strongest performance for the fourth month in a row, with airfreight demand increasing 3.8% y-o-y, continuing an upwards trend that became evident in mid-2018. Capacity grew 16.6% y-o-y, despite the small size of the region’s market, which makes up only 1.7% of the world’s share of airfreight. Year-to-date, demand and capacity are up by 3.9% y-o-y and 12.2%, respectively.