IATA: Retailers buying patterns lead recovery
The International Air Transport Association said Tuesday that load factors for airlines returned to pre-recession levels in October, though volume is still slightly below October 2008 levels and yields remain low.
'Air freight is halfway to recovering early 2008 volumes,' IATA said in its monthly economic update. 'Freight ton kilometers are just over 14 percent above December 2008 lows but still 15 percent down on levels in January 2008; such was the severity of the recession and world trade collapse at the end of last year. Freight ton kilometers flown in October were still 0.5 percent down on last year, but that is considerably better than the 5.4 percent decline reported in September.'
IATA said the recovery continues to be variable depending on regions, with emerging markets in Asia, Latin America and the Middle East benefiting more quickly than those in Europe and North America.
Also influencing the gradual recovery are buying trends among retailers, who had drawn down stocks during the demand trough.
'The renewed rising trend in air freight was led, by around two months, by the rise in the buying intentions of purchasing managers in manufacturing industries of major economies around the world,' IATA said. 'This leading indicator is pointing to further gains in airfreight in the next few months. But so far there has only been a small rise in overall world trade volumes since June. This is normal. As businesses expected a recovery in consumer spending they wanted adequate inventories. Moreover, excess inventories that had built at the end of 2008 had diminished. Since working capital tied up in transit needs to be kept to a minimum business turned to air freight as the transport mode of choice. The 14 percent rise in air freight volumes has been the result of this change in the inventory cycle.'
IATA said the issue going forward is 'whether the inventory cycle, and government stimulus, is developing into a sustainable recovery in consumer spending and business investment — or will it fizzle out once inventories have been built up to adequate levels.'