As the International Air Transport Association geared up for its annual general meetings in Miami, it released numbers that showed air freight growth is in a six-month period of flat activity.
The organization remained cautious in its outlook during the mini-boom of worldwide air freight volumes experienced last year, and now it’s expressing more of the same. In April, global air freight volumes rose 3.3 percent, year-over-year, the organization said in its latest data release. Capacity rose worldwide by 4.3 percent, year-over-year. From March, volumes declined 0.1 percent, while capacity rose 1.3 percent. With the low growth in April, load factors fell drastically because of added capacity, IATA found.
Compared to the rest of the year, April’s results were disappointing, as growth had previously been recorded at a 4.3 percent pace. So far this year, though, IATA said there has been no growth when compared to late 2014.
After a 12.2 percent rise in international air freight volumes in February, year-over-year, those figures rose only 1.6 percent in March. February’s rise came from a combination of port congestion and preparations for the Chinese Lunar New Year, IATA said. IATA put the April slowdown squarely on the shoulders of Asia-Pacific, which has seen a 10 percent lowering of trade volumes so far this year. The association said this is due partly to weak European demand. So far this year, Asian volumes have grown 7.3 percent, but April’s growth was limited to 4.5 percent. U.S. carriers recorded a 0.1 percent rise in volumes, year-over-year, and first quarter data showed a decrease in activity when compared to the fourth quarter of 2014. Middle Eastern carriers stood at the top of the heap in April, boasting a 14.1 percent expansion in volumes, year-over-year.
“However, better economic performance is expected in Q2, as the impacts of bad weather, falling oil prices and U.S. seaport congestion will dissipate,” IATA said. “Stronger growth in Q2 will likely support expansion in air freight demand in the coming months.”
Taking a view of the entire world, IATA predicted a ramping up of air cargo volumes is “unlikely” due to a lack of business confidence.
“Globally, April data show no increase in business confidence compared to the start of the year,” IATA said. “Furthermore, export orders have shown gradual decline throughout Q1, and are now indicating no growth. That said, for 2015 overall, moderate expansion in air freight is expected alongside anticipated improvements in the global economy.”
“Moderate” has become the new buzzword when describing short-term growth, mirroring a general slowing in growth of world trade. The organization did appear to leave the door open for significant growth in cargo, but that seems unlikely.
Netherlands-based WorldACD, an air cargo market data firm, measured the first month of the second quarter as continuing the small growth trend. It said volume was up worldwide 3.3 percent, year-over-year, highlighting cargo flights originating in Europe and terminating in North America as two areas for the largest growth. But it added that, compared to March, air cargo growth worldwide fell 6 percent.
Volumes in Asia-Pacific held steady from March to April.
The firm said worldwide yields, as a dollar value, fell 11 percent compared to the start of the year, but are on a 1.4 percent upswing over the first four months of 2015, if surcharges are excluded. However, yields were down 4 percent between March and April.
WorldACD also measured the activity of freight forwarders during the first quarter, noting only six of the top 20 forwarders saw revenue increases during the period. In fact, the group’s combined share of worldwide revenues declined 0.7 percent during the quarter. The top-20 group’s yields were down 12 percent. As an aside, WorldACD pointed out that general sales agents showed a higher than average activity growth and less yield loss than the top forwarders, outlining a potential trend in worldwide air cargo.
Data collected at airports around the world tells much the same story. In its latest results, Airports Council International recorded a 1.4 percent growth in air cargo volumes during the last month of the first quarter. Overall, results rose 4.7 percent during the quarter when compared to the first quarter of 2014.
The organization noted that February’s numbers were inflated by current events, and that March’s tiny growth wasn’t indicative of an across-the-board influx of freight. Air cargo activity in Europe fell 1.9 percent in March, year-over-year, as an 8.2 percent decrease in Hong Kong activity helped force a 1.4 percent decline in Asia-Pacific air cargo volumes. On the flip side, North American airports ended the quarter generally on the upswing, seeing a 5.7 percent increase in activity compared to March 2014. ACI reported that airports in the Midwest and West Coast saw big gains—Los Angeles was up 14.5 percent in March, while Chicago experienced a 32.9-percent increase—but the major air freight hubs saw declines. Activity in Memphis was down 2 percent, and Louisville experienced a 0.4 percent reduction in volumes.
“The first quarter was largely distorted by external shocks, which affected demand. In spite of these distortions, we still witness overall solid growth in both passenger and air freight traffic over the period. After removing all of the noise, we have yet to see the impact that the global business cycle will have on air transport demand,” ACI World Economics Director Rafael Echevarne said in a statement.
Echevarne pointed out a Chinese slowdown and European economic uncertainties have made predictions about the future of air cargo growth difficult.
Ross, a former American Shipper editor, writes about air transport and freight issues. He can be reached by email.
This column was published in the July 2015 issue of American Shipper.