IATA sees underlying annual cargo growth of 3%

The International Air Transport Association released its air freight market analysis for February 2016, showing a 5.6% year-over-year decrease in worldwide cargo traffic (in freight tonne kilometers flown). International cargo traffic, which accounts for 87% of total traffic, was down 6.4%.

As we pointed out when we analyzed February results from some of the world’s biggest cargo carriers and airports two weeks ago, IATA notes that the changing timing of the Lunar New Year holiday renders January and February data unreliable on their own, and that the two must be treated as a single month in order provide insight into demand trends. But in this case, even the combined 1.6% January/February decline from 2015 is not a reliable indicator of the underlying demand trend, because the labor problems at the US West Coast ocean ports in early 2015 forced a major shift of ocean freight to air.

However, if we compare the first two months of 2016 to the same period in 2014, we see a 6.3% increase in air freight demand. This is equivalent, on an annualized basis, to 3.1% growth per year— very much in line with what many consider to be the new normal.

Given the one-off impacts of the Lunar New Year and the port issue, we will not offer any detailed analysis of the results by region, other than to point out that the 12.4% y-o-y February decline reported by the Asian carriers reflects the fact that they benefited most from the US ocean port problems in 2015, and suffered worst from the timing of the Lunar New Year holiday in 2016, so their February performance provides very little information, and we will have to wait for March and April results to get a clear picture.

And regarding future results, IATA said “Looking ahead, ongoing headwinds continue to point to another year of just modest growth in 2016 as a whole. Indeed, the broader global trade backdrop remains subdued.” IATA also pointed to the close relationship between export orders (a component of the global Purchasing Managers’ Index) and growth in air freight demand, and concluded that a fall in orders “appears to rule out a surge in freight volumes anytime soon.”