Summarizing the air cargo market in 2017

IATA reported freight tonne kilometers across the airfreight industry rose by 9.0% y-o-y for the full year 2017, the strongest growth over a calendar year since 2010’s recovery from the industry’s abysmal performance in late 2008 through most of 2009.

Last year saw marked improvement in world trade conditions generally, and the resulting demand for manufactured exports and global restocking for retail were major factors contributing to air freight’s growth throughout the year. FTKs actually outperformed the larger world trade growth, which IATA attributed to year-on-year increases in new export orders for manufactured goods. Strong consumer confidence and growth in e-commerce and pharmaceutical transportation were other contributing factors.

You can read IATA’s full analysis for 2017 here, but some important takeaways include:

• Capacity measured in AFTKs rose by just 3.0% y-o-y for the full year 2017 – the slowest annual rate of growth since 2012 – and load factors subsequently increased 2.5 percentage points from 2016.
• International FTKs rose in all regions, but Africa topped the chart for international growth with 25.2% year-over-year growth, compared to only 3.7% in 2016.
• The share of international FTKs flown by carriers based in the Middle East Middle fell for the first time since 2000 to 13.7%.
• In seasonally adjusted terms, growth slowed by the end of the year for European, Asia-Pacific and North American airlines.

WorldACD’s data were similarly positive, indicating a 10.5% y-o-y increase in general cargo for the whole of 2017. For the month of December, cargo shipments from the Asia-Pacific and North American regions contributed to y-o-y growth of 4.5% in December.

While year-over-year growth slowed by the end of the year due to tougher annual comparisons, dollar yields were up 2.5% month-to-month in December, and up 23.5% y-o-y from December 2016. Yields typically fall between November and December, so the month-to-month gain is especially noteworthy. WorldACD notes capacity shortages in some markets, higher oil prices, and fluctuations in exchange rates for the higher yields. As Cargo Facts has pointed out in the past, higher yields do not necessarily lead to improved bottom lines if  labor and fuel costs are rising just as fast.

Looking ahead, forecasts are mixed. IATA’s expectations for the first half of 2018 call for steady growth across the industry of around 4.5% – down substantially from 2017’s y-o-y growth rates, but still indicative of strong growth building on already solid industry performance. WorldACD was less willing to speculate, instead noting the immortal words of wisdom: “It is difficult to make predictions, particularly about the future.”

Those interested in learning more about where air freight demand is headed in 2018 are invited to join us at Cargo Facts Asia where a round table panel will look at emerging trends in the air cargo market. The event will be held 23-25 April at the Mandarin Oriental Pudong in Shanghai. For more information, or to register, visit www.cargofactsasia.com