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New data confirms persistent decline in airfreight business

Air shipping containers being loaded on a plane. [Photo Credit: Jettainer]

There is more confirmation this week that the airfreight business is continuing its yearlong loss in altitude. The news comes at a time when traffic normally picks up as retailers race to get goods to stores for the holiday season.

World ACD, an air cargo research firm, and the International Air Transport Association (IATA) released figures showing a decline in global volume for October that was slightly better than the previous month.

According to World ACD data, airfreight volume, measured by kilos tendered to airlines, shrank 5% compared to the same month in 2018, while the airline trade association reported a 3.5% decrease in demand, measured in freight ton kilometers. IATA previously reported a 4.4% decline for September.

On a seasonally adjusted basis, however, airfreight has remained relatively flat since March, IATA noted on Dec. 4.

Experts attribute the market weakness to a global economic slowdown and the effects of the U.S. trade war with China.

October marks the 12th consecutive month of year-on-year declines in freight volumes. Fall is traditionally considered peak shipping season for freight transport modes but is falling short of normal expectations so far. Some airfreight professionals say they expect a slight improvement for business in December.

World ACD figures show an 11.2% cut in yield to $1.76 per kilogram. The drop in volume and rates resulted in a 16% decrease in revenue for air carriers.

Cargo capacity continued to increase, up 2.2% in October, IATA said, which translated to a 2.8% drop in the load factor (and -3.6% for World ACD).

2019 is lining up to be the worst year for the air cargo industry in a decade. IATA said international freight volumes fell 4% in October, but that is better than the 4.9% drop in September, and several major routes are showing signs of stabilizing.

One bright spot is specialty cargo, which was up 2.7% in October compared to an 8.2% loss for general cargo, according to World ACD. Volumes grew for high-tech goods (13%), pharmaceutical and temperature-controlled goods (8%), and seafood (6%), while the overall perishables market was down 1%.

Of the top-20 origin cities in the world, only two — Guangzhou (+16%) and Shanghai (+3%) — showed a volume increase in October, World ACD reported.

Africa was the only region to show any growth, which IATA attributed to investments from Asia driving demand. Asia-Pacific airlines saw demand for air freight contract by 5.3% in October 2019, compared to the same period in 2018. European airlines posted a 1.5% decrease in freight demand in October 2019 compared to the same period a year earlier.

Experts took some comfort that October export orders, according to the Purchasing Managers Index, had the best result since early 2018, continuing an incremental recovery since March.

On Friday, Dec. 6, British Airways parent IAG Group said its cargo ton kilometers, a benchmark for calculating revenue, fell 5.3% to 482,000. Year-to-date the group said cargo volume is off 1.9% compared with last year to 5.1 million cargo ton kilometers.

Meanwhile, IATA reported a modest slowdown in passenger traffic for October, with growth of 3.4% from a year ago compared to 3.9% growth in September, reflecting the overall soft global economy and sagging business confidence.

Eric Kulisch

Eric is the Supply Chain and Air Cargo Editor at FreightWaves. An award-winning business journalist with extensive experience covering the logistics sector, Eric spent nearly two years as the Washington, D.C., correspondent for Automotive News, where he focused on regulatory and policy issues surrounding autonomous vehicles, mobility, fuel economy and safety. He has won two regional Gold Medals and a Silver Medal from the American Society of Business Publication Editors for government and trade coverage, and news analysis. He was voted best for feature writing and commentary in the Trade/Newsletter category by the D.C. Chapter of the Society of Professional Journalists. He won Environmental Journalist of the Year from the Seahorse Freight Association in 2014 and was the group's 2013 Supply Chain Journalist of the Year. In December 2022, he was voted runner up for Air Cargo Journalist by the Seahorse Freight Association. As associate editor at American Shipper Magazine for more than a decade, he wrote about trade, freight transportation and supply chains. Eric is based in Portland, Oregon. He can be reached for comments and tips at [email protected]