Drop in cargo growth - IATA
Geneva : The International Air Transport Association (IATA) released
data showing air freight markets in March were up 5.9% compared to a
year ago and capacity grew 3.4%.
While this marks a significant improvement in volumes compared to
March 2013, much of the growth took place in the final quarter of 2013
(over and above the usual year-end volume growth).
Since the beginning of the year, air cargo volumes have been
basically flat. This plateau in volumes is consistent with the recent
pause in improvements to business confidence and world trade.
Business conditions in the US and Europe, however, provide a reason
to be cautiously optimistic for a resumption of growth in the months
ahead.
Rising export orders, in particular, are expected to give positive
momentum to US and European markets. But this is balanced against the
impact of a slowdown in Chinese manufacturing which is now into its
fourth month. This has already impacted exports from emerging Asian
countries, which contracted in February.
"Cargo markets had a boost in the last quarter of 2013, but have now
levelled off. It is a competitive industry with growing capacity chasing
weak demand. The business cycle will eventually swing upwards. But the
air cargo industry also needs to improve its value proposition if it is
to attract growth when markets improve.
Modernising air cargo processes and infrastructure offers the
potential to cut end-to-end shipping times by up to 48 hours. We cannot
let market doldrums hold us back from this critical competitive gain,"
said IATA's Director General and CEO, Tony Tyler.
In the 40 years since the introduction of the 747 freighter, the
end-to-end shipping time for goods by air has remained unchanged, at six
to seven days. During this period, innovators have created a new value
proposition for shippers and consumers based on an end-to-end model,
speeding up deliveries through integrating the airline and ground
components of freight, challenging the existing business model for many
participants.
At the World Cargo Symposium in March, IATA's Global Head of Cargo,
Des Vertannes challenged the industry to cut the end-to-end air freight
shipment time by 48 hours by 2020, to enhance the competitiveness and
value of air cargo.
Asia-Pacific carriers grew 6.9% compared to a year ago. Some of the
March growth will reflect a resumption of business activity after the
break for the Lunar New Year. Looking ahead, however, the continuing
slowdown of Chinese GDP growth is likely to ultimately impact trade
growth and air freight demand for local carriers.
Capacity grew by 7.5%, running slightly ahead of demand.
European airlines expanded by 5.1% compared to March 2013. Measures
of business activity in the Eurozone have been pointing to continuous
expansion since mid-2013, which is expected to be maintained. Capacity
expanded just 1.3%, strengthening load factors.
North American carriers grew 1.9% year-on-year. The slower growth
could be a reflection of the weather-related disruption in the first
quarter of the year. Business fundamentals in North America are strong,
which should support greater air freight volumes in coming months.
Capacity declined by 0.3%.
Middle Eastern carriers saw a 13.2% year-on-year rise in FTK volumes.
This strong performance comes on the back of airlines taking advantage
of growth in developed and emerging markets.
Carriers in the region are expanding their networks and services,
broadening the range of goods they transport. Capacity grew just 4.7%,
taking the load factor to nearly 50%.
Latin American air freight volumes were flat. Trade in the region
deteriorated in early 2014, which could explain the slowdown. Capacity
rose by 2.3%, weakening the load factor.
African airlines expanded 5.9% compared to March 2013. Growth in the
region remains volatile, but the average for the first quarter was an
expansion of 1.5%.
Growth has been affected by a slowdown in the South African economy.
Capacity grew broadly in line with demand, at 5.5%.
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