IATA: US-China trade war weighs heavily on air cargo

IATA: US-China trade war weighs heavily on air cargo

eTurboNews Syndication:

The International Air Transport Association (IATA) released data for global air freight markets showing that demand, measured in freight ton kilometers (FTKs), contracted by 3.9% in August 2019, when compared to same period in 2018. Month of year-on-year decline in freight volumes this marks the tenth consecutive, the longest period because the global financial meltdown in 2008.

Freight capacity, measured in available freight ton kilometers (AFTKs), rose by 2% year-on-year in August 2019. Month capacity growth has outstripped demand growth for the 16th consecutive.

Air cargo continues to handle strong headwinds from the intensifying trade war between your China and US, along with weakness in a few of the main element economic indicators and rising political uncertainties worldwide. Global trade volumes are 1% less than this past year.

Trade in emerging countries has been underperforming that of advanced nations throughout the majority of 2019. That is because of higher sensitivity of the emerging economies to trade tensions, rising political instability and sharp currency depreciation in a few of the main element emerging markets.

Global export orders continue steadily to fall. The global Purchasing Managers Index (PMI) remains in contraction territory. Since September 2018 its tracking of new manufacturing export orders has pointed to falling orders. Month in a row and for the next, all major trading nations reported falling orders.

“In August the impact of the US-China trade war on air freight volumes was the clearest yet. Year-on-year demand fell by 3.9%. Not because the global financial meltdown in 2008 has demand fallen for 10 consecutive months. This is concerning deeply. Sufficient reason for no signs of a détente on trade, we are able to expect the tough business environment for air cargo to keep. Trade generates prosperity. Trade wars don’t. That’s something governments ought never to forget,” said Alexandre de Juniac, IATA’s Director CEO and General.

August 2019 (% year-on-year) World share1 FTK AFTK FLF (%-pt)2 FLF (level)3
Total Market 100.0% -3.9% 2.0% -2.7% 44.6%
Africa 1.6% 8.0% 17.1% -2.5% 30.2%
Asia Pacific 35.4% -5.0% 2.3% -4.0% 51.6%
Europe 23.3% -3.3% 3.3% -3.3% 47.7%
Latin America 2.7% 0.1% -2.9% 1.1% 37.2%
Middle East 13.2% -6.7% -0.8% -2.7% 43.5%
North America 23.8% -2.4% 1.3% -1.5% 37.7%
1 % of industry FTKs in 2018  2 Year-on-year change in load factor  3 Load factor level

Airlines in Asia-Pacific and the center East suffered sharp declines in year-on-year growth altogether air freight volumes in August 2019, while North Europe and America experienced more moderate declines. August this past year africa and Latin America both recorded growth in air freight demand in comparison to.

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• Asia-Pacific airlines saw demand for air freight contract by 5% in August 2019, when compared to same period in 2018. The US-China trade war together with the slowdown in the Chinese economy have significantly impacted this region. The temporary shutdown of Hong Kong AIRPORT TERMINAL – the biggest cargo hub in the global world –added additional pressure. With the spot accounting for a lot more than 35% of total FTKs, this performance may be the major contributor to the weak industry-wide outcome. Air freight capacity increased by 2.3% in the last year.

• UNITED STATES airlines saw demand decrease by 2.4% in August 2019, when compared to same period a complete year earlier. Capacity increased by 1.3%. The US-China trade war and falling business confidence continue steadily to weigh on the region’s carriers. Freight demand has contracted for the biggest routes between North and Asia America, where seasonally-adjusted volumes are down almost 5% in comparison to their level in July 2018.

• European airlines posted a 3.3% reduction in freight demand in August 2019 when compared to same period per year earlier. Weaker manufacturing conditions for exporters in Germany, softer regional economies, and ongoing uncertainty over Brexit, have impacted the recent performance. Capacity increased by 3.3% year-on-year.

• Middle Eastern airlines’ freight volumes decreased 6.7% in August 2019 when compared to year-ago period. This is the sharpest drop in freight demand of any region. Capacity decreased by 0.8%. Escalating trade tensions, the slowing in global airline and trade restructuring have impacted the region’s performance because the fourth quarter of 2018. Economic uncertainty from oil price volatility on the list of region’s oil reliant markets has added additional pressure.

• In August 2019 of 0 latin American airlines experienced a rise in freight demand.1% when compared to same period this past year and a capacity loss of 2.9%. Low economic growth compounded by the US-China trade war and political instability in a few national countries have impacted the region’s performance. Recent currency volatility in the region’s key economies have contributed also.

• In August 2019 african carriers posted the fastest growth of any region, with an upsurge in demand of 8% when compared to same period per year earlier. This continues the upwards trend in FTKs that is evident since mid-2018 and makes Africa the strongest performer for the sixth consecutive month. Capacity grew 17.1% year-on-year. Strong trade and investment linkages with Asia have underpinned a double-digit upsurge in air freight volumes between your two regions in the last year. China recently confirmed an additional $60 billion investment in to the continent.

Author: George Taylor

Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.