IATA: ‘Subdued’ air cargo demand to continue in 2016

The economic slowdown in China, a recent drop in commodity prices, and a possible increase in U.S. interest rates has increased uncertainty about global growth in the air cargo industry, according to the International Air Transport Association.    The International Air Transport Association said last week it expects weak demand for airfreight to continue into 2016.
   The economic slowdown in China slowdown, a recent drop in commodity prices, and a possible increase in U.S. interest rates has increased uncertainty about global growth in the air cargo industry, according to the trade association.
   “A tough global economic environment and feeble world trade have subdued air cargo demand,” IATA said in an industry update.
   Average airfreight load factor, a measure of cargo space utilization – i.e. the amount of air cargo capacity that is actually filled – has fallen to its lowest level in six year, according to IATA senior economist Julie Perovic.
   Perovic attributed the decline in average load factor primarily to excess capacity, which has been exacerbate by an increase in the number of available passenger aircraft. Belly capacity on passenger flights represents a large portion of airfreight transportation.
   Airfreight capacity in the third quarter of 2015 increased 2.2 percent compared with the previous quarter, according to IATA figures.
   “This is quite a dismal picture,” said Perovic.
   Airfreight traffic has grown at a much slower rate than passenger airlines in recent years. Air cargo volumes are currently up around 8 percent from pre-financial crisis levels in 2008, while passenger traffic has surged 42 percent, Perovic noted.
   According to the most recent data from IATA, air cargo shipments, measured in freight ton kilometers, have grown 2.6 percent in the first ten months of 2015.
   The 2.6-percent growth rate for 2015, however, includes some factors that are unlikely to repeat in 2016, like an increase in air cargo shipment early in the year that was driven by the massive congestion issues experience at U.S. West Coast ports and recalls for some Japanese auto parts in the U.S.
   IATA said recently airfreight volumes grew just 0.5 percent year-over-year in October.