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March 2018 IATA Air Freight Market Analysis
Boost to air freight from the re-stocking cycle has run its course

 
FTK growth slowed significantly in March…
After a robust start to the year, the industry-wide FTK growth rate slowed to just 1.7% year-on-year in March, down from a robust 6.7% in February. This month’s outcome represents the slowest pace of annual growth since the early part of 2016. Nonetheless, FTKs grew by 5.4% year-on-year in Q1 as a whole. With the exception of Latin America, each region saw a slowing in year-on-year FTK growth this month, with annual growth turning negative in Africa.


...in line with a slowing in the traffic trend

While the slowdown in annual growth was quite abrupt this month, the change in trend of seasonally-adjusted (SA) FTKs has been apparent for some time. After rising at a double-digit annualized pace between 2016 and mid-2017, the upward SA FTK trend slowed to a 4% annualized rate in late-2017, and FTK volumes have fallen in the last couple of months.
 

We would caution against reading too much into these latest months’ data as yet. Given the typical volatility inherent in the monthly data, such events are not unprecedented (we saw a similar decline in Jan-Feb 2017, for example). Moreover, the underlying global trade backdrop remains supportive. Indeed, while noting some clear near-term downside risks, the International Monetary Fund (IMF) modestly upgraded its forecasts for international trade growth in 2018 and 2019 in its latest World Economic Outlook.

Nonetheless, even if FTKs were to reverse March’s month-on-month SA fall in the April data, the bigger picture is the recent period of air freight outperformance looks to be firmly behind us.


Africa – growth slips into reverse this month 
Having topped the international FTK growth chart for 17 of the previous 18 months, the fortunes of African airlines underwent a sharp reversal in March. The level of international FTKs for the region’s carriers are now 3.7% lower than a year ago.


Highlights of the March 2018 Air Freight Market Analysis

  • Annual growth in industry-wide freight tonne kilometres (FTKs) slowed to a 22-month low of 1.7% in March.
  • We would caution against reading too much into the softening in seasonally adjusted (SA) volumes in recent months as yet; we continue to expect FTKs to grow in the region of 4-5% in 2018. However, the boost from the inventory re-stocking cycle looks to have run its course, alongside a slower upward trend in FTK volumes.
  • Annual growth in air freight capacity exceeded that of demand for the first time in 20 months in March. Download the full document here. 

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