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July 2017 IATA Air Freight Market Analysis
Freight growth remained robust in July, but nearing cyclical peak

Another month of double-digit FTK growth…
Industry-wide FTKs grew by 11.4% year-on-year in July, up slightly from 11.2% in June, and well ahead of the five and ten-year average rates (4.2% and 3.1%, respectively). Annual FTK growth has now been in double-digit territory for four of the past five months.

…echoed in buoyant manufacturer export orders

The resurgence in air freight demand over the past year or so has been set against a stronger global economic and trade backdrop. The turnaround in trade conditions has been most visible in rising trends in the new export orders components of manufacturing purchasing managers’ indices (PMIs) in the world’s major exporters since early 2016. Meanwhile, data from the Netherlands CPB show that global trade volumes grew by 4.1% in H1 2017 compared to the same period in 2016. This was the strongest first half of a year for world trade since 2011. 

More generally, the recent outperformance of air freight relative to wider world trade has also reflected factors specific to the air transport industry, particularly the ability of air freight to allow firms to restock quickly at the start of upturns in the economic cycle. As we have noted before, the increase in the SA trend in industrywide FTKs coincided with a sharp decline in the (US) inventory-to-sales ratio during 2016.

More mixed signs are emerging, however
The strong finish to 2016 and start to 2017 for freight volumes looks set to underpin robust year-on-year growth in FTKs for this year as a whole. In fact, we judge that the risks to our current forecast of 7.5% growth in FTKs for 2017 still lay to the upside.

Highlights of the July 2017 Air Freight Market Analysis

  • Global freight tonne kilometres (FTKs) posted double-digit annual growth for the 4th time in 5mths in July (11.4%).
  • The robust growth in freight volumes since early-2016 has been consistent with the typical pattern seen during upturns in the economic cycle. However, indicators suggest that the upturn in FTK growth may be nearing a peak.
  • African airlines posted the fastest int’l FTK growth rate in July, alongside robust growth for the major regions.
  • FTKs grew by more than three times the pace of capacity in July, which resulted in the load factor rising sharply. Download the full document here. 

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