Logistics And Frieght Forwarding

Sharp slowdown in ME air freight growth

Middle Eastern carriers’ year-on-year freight volumes increased 3.1 per cent in April 2017, a sharp slowdown in growth from the 16.3 per cent increase in March, said data released by International Air Transport Association (Iata). The drop appears to be related to volatile monthly developments last year rather than a pronounced downturn, it said. Capacity increased 0.8 per cent.

International freight volumes increased 8.0 per cent year-to-date in April – this is slower than the five-year average pace of growth of 11 per cent. Seasonally-adjusted freight volumes maintained their upward trend. Demand remains strong between the Middle East and Europe but traffic to Asia has weakened.

The global air freight demand, measured in freight tonne kilometres (FTKs), rose 8.5 per cent in April 2017 compared to the year-earlier period. While this was down from the 13.4 per cent year-on-year growth recorded in March 2017, it is well above the average annual growth rate of 3.5 per cent over the past five years, the Growth in freight capacity, measured in available freight tonne kilometres (AFTKs), slowed to 3.9 per cent in April 2017.

Business confidence indicators remain consistently upbeat, suggesting year-on-year FTK growth will remain robust for the rest of the second quarter. However, there are signs that the cyclical growth peak for air cargo has passed, particularly given that the inventory-to-sales ratio stopped falling at the end of last year. Air cargo often sees a boost in demand at the beginning of an economic upturn as companies look to restock inventories quickly.

This tapers as inventories are adjusted to new demand levels. Over the whole year, air freight is headed for a healthy growth rate of 7.5 per cent, supported by strong pharmaceuticals and e-commerce. “Demand eased in April.

Growth rates, however, are still much more robust than anything we have seen in the last six years. That’s good news, but it should not be taken as a message that all is well in air cargo. The industry’s antiquated processes need modernisation.

With e-air waybill utilisation topping 50 per cent in April, progress is being made. And we must harness the momentum to drive transformational change across the way the industry operates,” said Alexandre de Juniac, Iata’s director general and CEO. All regions, with the exception of Latin America, reported year-on-year increases in demand in April 2017.

Airlines in Europe and Asia-Pacific accounted for more than 70 per cent of the annual increase in global freight volumes. North American airlines accounted for much of the rest with Middle Eastern and African airlines also making a positive contribution. o Asia-Pacific airlines’ freight volumes expanded 8.4 per cent in April 2017 compared to the same period a year earlier and capacity increased by 3.7 per cent. The increase in volumes reflects the strength of the order books reported by exporters across the region.

Seasonally-adjusted volumes recently surpassed the levels reached following the 2010 post-global financial crisis bounce-back. o North American carriers posted an increase in freight volumes of 7.3 per cent in April 2017, and a capacity increase of 2.1 per cent. Seasonally-adjusted volumes jumped in April, however, it is too soon to tell if this is the start of a lasting pick up. The strength of the US dollar continues to boost the inbound freight market but is keeping the export market under pressure.

o European airlines posted a 12.9 per cent increase in freight volumes in April 2017 and a capacity increase of 6.9 per cent. This was a slight slowdown from March but still well above the five-year average of 3.5 per cent. International freight volumes grew by 13.1 per cent year-on-year.

The ongoing weakness of the Euro persists in boosting the performance of the European freight market which has benefitted from strong export orders over the last few months. – TradeArabia News Service

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