Winners and losers in the first quarter of 2013

The International Air Transport Association today released its summary of worldwide air freight demand and capacity in March 2013. IATA’s results confirm our own analysis posted here two weeks ago: That demand for air freight in March would continue the pattern of low-single-digit declines seen in the recent past.  IATA has not changed its full-year 2013 forecast of 2.7% growth in demand, but, like many other observers, appears to believe that a return to growth hinges on what happens in the Europe.

According to IATA: “recent developments have raised questions about the pace of the global economic recovery. China’s first quarter economic growth result was solid but below expectations, several Eurozone confidence indicators showed declines in March, and the US government enacted a series of spending cuts. The recent weakening in air freight demand appears to be reflecting the same uncertainty.”

However, IATA goes on to point out that, below expectations or not, China’s economic growth in the first quarter was over 7% y-o-y, that the effects of government cutbacks in the US were relatively minor, and that business confidence indicators in Asia and North America continue to rise. Europe, on the other hand, is still mired in economic uncertainty. And since Europe is a major trading partner of both the US and China, meaningful growth in air freight demand is unlikely without economic recovery in Europe.

The chart below shows IATA’s breakdown of airfreight demand and capacity by carrier home region. If there is one obvious takeaway from it, it is that carriers from the Middle East, with their big fleets of cargo-friendly widebody passenger aircraft (particularly 777-300ERs) and ever-widening networks, are musclng aggressively into the airfreight arena. The double-digit gains reported by the big four carriers from the Gulf Region (Etihad, Emirates, Qatar, and Saudia), as well as by Turkish Airlines, are coming at the expense of the European and Asian carriers.

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One Comment

  1. davidharris says:

    One thing that I should add to the above discussion is that while the March and first-quarter statistics were anything but encouraging, IATA did make the following comment in its discussion:

    “The March decline in air cargo is most likely a temporary stall. The fundamentals for a sustained improvement in air cargo volumes are in place. Business confidence continues to signal forthcoming expansion, and the solid increase in new export orders seen in 2013 should boost air freight in the coming months.”

    To which we can add the comments made by Boeing’s Jim Edgar in his presentation at the recent Cargo Facts Asia Event in Hong Kong regarding recent forecasts from the IMF and Global Insight predicting that three key indicators of growth in air freight demand — worldwide GDP, worldwide industrial production, and world trade — would all return to their normal historic growth patterns in 2014.

    So while we can expect a continuation of the current difficulties in the near term, there is hope for a return to growth by the end of this year.

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