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July 2018 IATA Air Freight Market Analysis
Little sign of change in the moderate uptrend in air cargo volumes

 
Ongoing moderate uptrend in freight volumes…
Year-on-year growth in industry-wide FTKs fell to 2.1% in July – its slowest pace since May 2016 and well below the five-year average FTK growth rate (5.1%). As was the case last month, the latest data may have been distorted at the margin by the disruption at Nippon Cargo, which persisted into early-July. Nonetheless, the bigger picture is there has been little sign of change in the moderate uptrend in air freight volumes that has now been in place since mid-2017.


…as the inventory cycle has run its course

As we have noted before, the moderation in the SA FTK trend mainly reflects the fact that the inventory restocking cycle – which underpinned the strong period of growth in 2016 and early-2017 – had largely run its course by the end of last year. (Recall that air freight typically gains market share from slower transport modes during periods when firms need to restock inventory levels quickly.) Reduced momentum in air freight demand has also been consistent with ongoing signs of a broad-based weakening in manufacturing firms’ export order books since the start of 2018. The new export orders component of the manufacturing Purchasing Managers’ Index (PMI) climbed back into positive territory in the US in August, but the picture is less positive in Asia and Europe.


African int’l FTKs continue to trend downwards
After a very strong showing in 2017 as a whole, annual growth in international FTKs flown by African airlines fell in July for the fourth time in five months (-8.2%). Having peaked in SA terms at the end of last year, FTKs have now trended downwards at an annualized pace of almost 18% over the past six months, which reflects weaker demand conditions on all the main markets to/from the continent.


Highlights of the July 2018 Air Freight Market Analysis

  • Annual growth in freight tonne kilometres (FTK) fell to 2.1% in July – its slowest pace since May 2016. There has been little sign of any change in the moderate upward trend in seasonally adjusted (SA) demand.
  • The risks to our forecast of 4.0% FTK growth in 2018 now lie slightly on the downside. More generally, prospects going into 2019 will depend on the extent that potential headwinds from trade protectionism can be counteracted by opportunities from fast-growing areas such as e-commerce.
  • Annual growth in freight capacity exceeded that of demand in July for the fourth time in five months.  Download the full document here. 

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