DOHA: Despite slowdown in global demand for air cargo, measured in freight tonne kilometers (FTKs), the Middle Eastern carriers’ freight volumes grew 3.8 percent in June, 2018 (year-on-year), 1.1 points higher against the May figure of 2.7 percent.
However, when compared to past few years’ performance, this (3.8 percent) year-on-year growth is well below the average five-year rate of 9.5 percent.
The capacity of the Mideast airlines, which include three fast growing major Gulf carriers—Qatar Airways, Emirates and Etihad Airways—increased by 4.5 percent in June 2018 compared to the same month last year. Growth for first half of 2018 was 4.3 percent year-on-year, and the expectation is for volume growth to remain modest in the months to come, according to a report by the International Air Transport Association (IATA) released yesterday.
The latest data by IATA, which represents some 290 airlines comprising 82 percent of global air traffic, show that the global air freight markets demand rose 2.7 percent in June 2018, compared to the same period the year before. This continues the slowdown in air cargo growth that began earlier in 2018. Growth for the first half of 2018 stands at 4.7 percent, less than half the growth rate in 2017.
Freight rose by 4.1 percent in June 2018. Capacity growth has now outstripped demand growth in every month since March 2018.
“Air cargo continues to be a difficult business with downside risks mounting. We still expect about 4 percent growth over the course of the year. But the deterioration in world trade is a real concern. While air cargo is somewhat insulated from the current round of rising tariff barriers, an escalation of trade tension resulting in a ‘reshoring’ of production and consolidation of global supply chains would change the outlook significantly for the worse,” said Alexandre de Juniac (pictured), IATA’s Director General and CEO. The IATA cited three main factors driving the slowdown. Firstly, the restocking cycle, during which businesses rapidly built up inventories to meet demand, ended in early 2018. There was a marked fall in air cargo volumes from March.
Secondly, the world is witnessing a structural slowdown in global trading conditions as indicated by the fall in the Purchasing Managers Index (PMI) to its lowest level since 2016. Factory export order books have turned negative in China, Japan and the US.
And the third reason was the temporary grounding of the Nippon Cargo Airlines fleet in the second half of June which exaggerated the slow-down by shaving up to 0.5 percentage points off June growth.
Juniac added: “Trade wars never produce winners. Governments must remember that prosperity comes from boosting their trade, not barricading economies.”
Commenting on the regional performance, the IATA report said that all other regions except Africa reported a year-on-year increase in freight volumes in June2018, but the slow growth in Asia-Pacific, which accounts for nearly 37 percent of the entire air cargo market, dragged the global growth rate down.
The Latin American airlines experienced growth in demand of 5.9 percent in June 2018,–continuing its recent run of posting the largest increases of any region.
