It’s official: Air cargo is booming. With reports in from research firms WorldACD and Drewry, and now IATA, the first half of 2017 saw its strongest freight demand increase since 2010.
Yesterday’s IATA report for June indicated an overall improvement in global trade for the month, with year-over-year demand growth of 11 percent. New global export orders are near a six-year high, IATA said, with support from a stronger global economy. The June report from WorldACD, released a few days earlier in late July, showed comparable global growth of 10.5 percent.
“Demand is growing at a faster pace than at any time since the global financial crisis,” said IATA director general and CEO Alexandre de Juniac. “That’s great news after many years of stagnation. And, even more importantly, the industry is taking advantage of this momentum to accelerate much-needed process modernization and improve the value it provides to its many customers.”
Two-thirds of the global demand growth during the first half of the year came from carriers in Europe and Asia, with Europe posting a y-o-y demand increase of 14.3 percent for June, as a weak euro is strengthening the European freight market and incentivizing exports. Freight volumes for Asia grew 10.1 percent, y-o-y, for June, with most of the growth coming from international routes within Asia and between Asia and Europe.
Latin America experienced its second consecutive month of y-o-y demand growth in June after posting declines during most months for the past two-and-a-half years. Latin American airfreight demand rose by 9.8 percent, y-o-y in June. However, IATA attributed most of that increase to volatility in 2016 rather than sustained growth in 2017 as economic and political conditions in Brazil particularly remain weak.
Carriers in the Middle East also saw an increase of 3.7 percent y-o-y in June, which marks a significant decline from the region’s 10.8 percent average annual rate during the past five years. IATA noted that the Middle East’s share of total international freight flown during the first half of the year declined for the first time in 17 years as other regions – especially on the Asia-to-Europe route – compete for market share.
June reports from WorldACD and Drewry’s East-West Airfreight Price Index noted continued volume growth into the peak season alongside increasing load factors for June, as demand outstrips increases in capacity. IATA reported global freight capacity rose 5.2 percent y-o-y in June.
However, while WorldACD and Drewry’s reports had positive outlooks into July, IATA – as it almost always does in its monthly reports – added a note of caution. Signs point to June being the peak of the latest growth period, the association said, noting that the global inventory-to-sales ratio has stabilized after recent declines. This indicator suggests that air cargo may slow as companies no longer seek to restock falling inventories. However, IATA still said it expects continued demand growth, albeit at a slightly lower 8 percent rate during the third quarter of 2017.
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