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February 2017 IATA Air Freight Market Analysis

Strong start to 2017 for freight growth, but grounds for caution?

Leap year effects are distorting the data…
Global FTKs grew by 8.4% year-on-year in February. However, the data are distorted by the fact that 2016 was a leap year. Adjusting for the one fewer day in February this year, we estimate that the ‘underlying’ FTK growth rate was even stronger at around 12% – almost four times its five-year average rate (3.0%).

Asia Pacific and European airlines once again accounted for the bulk (c.75%) of the annual change in industry-wide FTKs. (See Chart 1.) However, Latin American carriers detracted from annual FTK growth for the 25 th time in 27 months.

…but strong annual growth in FTKs in early-2017
The timing of Chinese New Year can complicate yearon-year comparisons at this time of year, but annual FTK growth clearly made a strong start to 2017. Global FTKs were 7.2% higher in year-on-year terms in January and February combined, which we estimate is consistent with 9.0% adjusting for the leap year.

The current strength in the annual FTK growth rate is partly flattered by the combination of the weak start and the strong finish to 2016. While conscious of the data disruption at this time of year, the decline in SA FTK levels in recent months gives pause for thought, and is something that we will monitor closely in the coming months.

World trade conditions have improved
However, the current strong annual FTK growth rate ties in with growing signs of a recovery in world trade conditions in recent months. The new export orders component of the global purchasing managers’ index (PMI) remains close to a six-year high, underlining the health of global manufacturers’ export order books. At current levels, the PMI measure is consistent with ongoing solid FTK growth in H1 2017.

More generally, traditional drivers for air freight have also been strong recently, including a pronounced pick-up in semi-conductor material shipments during the final quarter of 2016. Such factors have seen air freight’s share of world trade rise sharply since the middle of last year. (See Chart 3.) The increasing importance of niche areas such as pharmaceuticals and cross-border e-commerce offer opportunities for air freight, and may yet help it to de-couple from wider world trade conditions.

Highlights of the February 2017 Air Freight Market Analysis

  • Global freight tonne kilometres (FTKs) grew by 8.4% year-on-year in February – consistent with annual growth of more than 12% after allowing for the fact that 2016 was a leap year.
  • Air freight has gained market share over the past year, alongside a recovery in world trade conditions…
  • …but the recent drop in seasonally adjusted (SA) FTKs sounds a note of caution regarding the outlook.
  • The freight load factor has risen in recent months, driven by ongoing moderation in capacity growth. Download the full document here. 

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